For many Australian businesses, the Christmas and New Year period means a well-earned break. If you employ sponsored workers, there are a few things to consider before closing for the holidays.

Decisions about annual leave, unpaid leave, and reduced working hours can affect more than just the usual employment arrangements. They may also have implications for your sponsorship obligations and the visa conditions of your overseas employees.

 

Seasonal shutdown arrangements

Christmas shutdowns look different depending on the industry and the business.

Some businesses, particularly in construction, manufacturing, professional services and education, close completely between Christmas and New Year.

Other businesses continue operating with reduced staff, rotating rosters, or a smaller team to cover essential services.

For industries such as retail, hospitality, tourism, health and aged care, the Christmas period can actually be one of the busiest times of the year. Employees may be required to work throughout the holiday period, including public holidays.

There are also public holidays to consider, including Christmas Day, Boxing Day and New Years’s Day, as well as any additional or substitute public holidays that apply in your state or territory.

 

Employment contract and award requirements

Sponsored workers are entitled to the same workplace protections as Australian employees. Sponsors must also generally ensure that their employment terms and conditions are no less favorable than those provided to Australian workers performing equivalent work.

Before directing employees to take leave, review the employment contract, modern award and enterprise agreement.

Annual leave

Under the National Employment Standards, full-time employees accrue four weeks of paid annual leave a year, and part-time employees accrue it on a pro rata basis.

 

Many modern awards and enterprise agreements allow employers to direct employees to take annual leave during a Christmas shutdown. However, notice requirements apply, and some workplace instruments require employees to agree to the arrangement.

 

Leave loading

Some employees are entitled to annual leave loading, commonly 17.5% under their award, enterprise agreement or employment contract.

Annual leave loading is not a universal entitlement under the National Employment Standards, so check whether it applies to your employees and make sure payroll calculates this correctly.

 

Insufficient leave balance

New starters may face this problem, including sponsored workers who have only just arrived in Australia. Where an employee accrued annual leave doesn’t cover the whole shutdown, you may be able to agree to advance leave, provided the applicable award, agreement or contract allows it. Put any such agreement in writing.

Do not assume that an employee can be required to take unpaid leave just because their annual leave balance is too low.

 

Unpaid leave

Unpaid leave generally requires the employee’s agreement. An employer cannot ordinarily stand employees down without pay just because the business has chosen to close over Christmas.

Under the Fair Work Act 2009, unpaid stand-down is only permitted in specific circumstances outside the employer’s control. A planned seasonal shutdown would not usually qualify.

For employers of sponsored workers, unpaid leave may also affect sponsorship obligations and visa conditions.

 

Public holidays

Employees are generally entitled to be paid for public holidays that fall on days they would normally work. Employees who work on public holiday may also be entitled to penalty rates or other benefits under their award or agreement.

 

Applicable workplace instruments

Identify the modern award, enterprise agreement or contract that covers each sponsored worker, and read its shutdown, annual leave and public holiday clauses carefully. If the instrument and the contract differ, the worker must receive whichever gives them greater legal entitlement.

 

Visa condition considerations

This is where employers need to be particularly careful.

A change to employment arrangements that is acceptable under workplace law may still create problems under Australia’s sponsorship and migration requirements. Employers should consider the following:

  • Salary obligations – Sponsors must meet the salary requirements attached to the approved nomination, including the applicable market salary rate and income threshold. Unpaid leave, reduced hours or a temporary reduction in salary may put a sponsor at risk of breaching these obligations. There are limited circumstances where exceptions may apply, but employers should not assume that an arrangement is acceptable simply because the employee has agreed to it.

 

  • Nominated occupation and duties – Sponsored workers are generally expected to work in the occupation for which they are nominated. During a shutdown, some businesses may ask employees to take on different tasks, such as stock-taking, cleaning, or covering another position. Consider whether these duties are consistent with the worker’s nominated occupation and visa requirements before making these changes.

 

  • Work for another employer –Some sponsored visas restrict the visa holder from working for another employer. If a sponsored worker is placed on unpaid leave over Christmas, they may look for temporary work to make up for the lost income. However, taking another job could breach their visa conditions.

 

  • Notification obligations –Sponsors are required to notify the Department of Home Affairs of certain changes to a sponsored worker’s employment and other specified changes. The notification deadline is 28 days, although the requirements depend on the circumstances. If the shutdown involves changes to salary, working hours, duties, or work location, consider whether these are required to be reported to the Department.

 

  • Travel and the break –Many sponsored workers take the opportunity to visit family overseas during the Christmas period. There is generally no issue with using approved annual leave for overseas travel, but employers should make sure the leave is properly recorded, and the employee’s return-to-work date is clear. Visa holders should also check their travel and visa requirements before leaving Australia.

 

Communication and payroll

Once arrangements are confirmed, tell employees what to expect and record everything accurately.

Give all staff written notice of shutdown dates, whether leave will be directed, and how limited leave balances will be handled. For sponsored workers whose first language may not be English, use plain language and offer to discuss in person.

Check pay rates, leave loading, public holiday payments, and allowances for the break. Sponsored workers must keep receiving their nominated salary, so review payroll before the shutdown, not after the first January pay run.

Record each day of leave, its type, dates, and the remaining balance. Accurate records support compliance under workplace relations law and the sponsorship framework, and sponsors must keep certain records for set periods.

Issue payslips within one working day of payment, including over the holiday period.

Put any agreement to take leave in advance, or any other variation, in writing and give the employee a copy.

 

Shutdown preparation checklist

Use this list as a starting point for each sponsored worker.

Planning

  • Confirm shutdown dates and public holidays in your state or territory.
  • Identify each sponsored worker, their visa subclass, and nominated occupation.
  • Check each worker’s award, enterprise agreement and contract.

Leave and entitlements

  • Compare each worker’s accrued annual leave with the shutdown length.
  • Check whether leave can be directed, and the notice required.
  • Check leave loading applies and is set up in payroll.
  • If a balance is short, explore lawful options and document any agreement.
  • Consider visa implications before proposing unpaid leave or reduced hours.

Visa and sponsorship

  • Confirm that the nominated salary will continue to be paid.
  • Keep duties within the nominated occupation.
  • Assess whether changes to pay, hours, duties or location require notifying the Department of Home Affairs.
  • Discuss restrictions on working for another employer.
  • Seek migration advice if in doubt.

Communication and records

  • Give all staff plain-language written notice within required periods.
  • Confirm that sponsored workers understand the impact on pay and leave.
  • Update leave records and keep copies of notices and agreements.
  • Check payroll settings and schedule payslips on time.

After the break

  • Confirm workers have returned to their nominated duties.
  • Reconcile payroll and leave records.

 

A Christmas shutdown might be a routine part of running a business, but employers who sponsor overseas workers need to think beyond the usual leave and payroll arrangements.

Before closing for the holidays, take the time to check employment entitlements, salary obligations and visa conditions. In particular, be careful about unpaid leave, reduced hours, and changes to a sponsored worker’s duties.

Getting the arrangements right before the shutdown is much easier than trying to resolve a sponsorship issue in the new year.