Planning a Christmas Shutdown? What Your Business Needs to Consider
As Christmas approaches, many businesses are preparing to close or reduce operations over the holiday period. While the break may be welcome, several practical matters need attention before the doors close.
Businesses need to consider employee leave, public holidays, payroll, superannuation, and upcoming payments. This year, the introduction of Payday Super adds another important consideration, particularly for businesses planning to process payroll early or close for an extended period.
Planning ahead can help ensure important obligations are not overlooked while the business is closed.
Planning Employee Leave During a Shutdown
Businesses closing temporarily over Christmas and New Year need to understand the rules for directing employees to take annual leave. Depending on the applicable award or registered agreement, employers may be able to direct employees to take paid annual leave during the shutdown. However, there are rules about how much notice must be given and whether the direction is reasonable. Many awards require at least 28 days’ written notice of a temporary shutdown, although requirements can vary.
Employers also need to consider employees who do not have enough accrued annual leave to cover the shutdown. Options may include annual leave in advance, time off in lieu or unpaid leave, depending on the applicable rules and the employee’s agreement. Employees cannot automatically be required to take unpaid leave simply because the business is closing temporarily.
Review shutdown dates and employee leave arrangements early to ensure you meet the relevant notice requirements. The Fair Work Ombudsman provides guidance on annual leave and shutdown arrangements. Share proposed shutdown dates and leave arrangements with your Bookkeeper early so any payroll issues can be addressed before the holiday period.
Remember Public Holidays
Christmas Day, Boxing Day and New Year’s Day can affect how employee leave and wages are calculated. If a public holiday falls during an employee’s paid annual leave and they would ordinarily have worked that day, treat it as a public holiday rather than annual leave. Do not reduce their annual leave balance for that day.
If employees will be working over the holiday period, employers may also need to consider public holiday penalty rates, minimum engagement periods and other entitlements under the relevant award or agreement.
Provide your Bookkeeper with accurate leave arrangements and working schedules before the shutdown to help ensure payroll is processed correctly.
Payday Super Continues Over Christmas
This Christmas will be Payday Super’s first holiday shutdown, which commenced on 1st July 2026. Employers must generally ensure employees’ super funds receive Superannuation Guarantee contributions within seven business days of payday.
These obligations continue even when a business is closed, or the person responsible for payroll is on leave. Weekends, public holidays and payment processing times can affect when contributions reach employees’ super funds. If payroll is processed early or payments are scheduled during the shutdown, allow enough time for superannuation contributions to be received.
Confirm payroll dates and superannuation payment arrangements with your Bookkeeper before the break, particularly where payments will fall due during the shutdown.
Christmas Bonuses, Parties and Gifts
Christmas bonuses, gifts and end-of-year functions can have different tax and superannuation implications depending on the type of payment or benefit provided.
Cash bonuses are generally subject to PAYG withholding, and Superannuation Guarantee may also apply depending on the nature of the payment.
Christmas parties and gifts can have different Fringe Benefits Tax (FBT), GST and income tax implications depending on who receives the benefit, what is provided and the circumstances. For example, certain minor benefits valued at less than $300 may qualify for an FBT exemption, but specific conditions apply.
Keeping accurate records and receipts for Christmas functions, gifts and bonuses helps ensure these expenses are recorded correctly. Your Bookkeeper can assist with recording these transactions, while a registered tax agent can advise on FBT and income tax implications where required.
Keep an Eye on Cash Flow and Upcoming Payments
A Christmas shutdown can affect cash flow, particularly where a business has reduced trading income while regular expenses continue.
Before closing, businesses should consider what payments will fall due during December and January. These may include employee wages, superannuation, supplier invoices, rent, loan repayments and ATO obligations. It is also worth following up on outstanding customer invoices and arranging supplier payments that fall due during the shutdown.
Review upcoming financial commitments before closing so you can identify and allow for payments due during the holiday period.
Make Sure the Bookkeeping Is Ready for the Break
Before closing for the holidays, confirm what needs to be completed and which obligations will continue during the shutdown. This may include finalising payroll dates, approving employee leave, recording outstanding invoices and receipts, and arranging payments that fall due while the business is closed.
Check your Bookkeeper’s availability over the holiday period and agree on what must be completed before normal services resume. Payroll, superannuation and other obligations may still need attention even when normal business operations pause. Establishing who is responsible for completing these tasks before the shutdown can help prevent missed payments and reporting deadlines.
A Little Planning Goes a Long Way
The Christmas shutdown should be a chance to rest, not a time to worry about missed payments or outstanding obligations.
Reviewing employee arrangements, payroll, superannuation and upcoming expenses before closing can reduce the risk of last-minute problems and help businesses start the new year with their financial records in good order.
Confirm the shutdown arrangements with your Bookkeeper early. Make sure responsibilities, continuing obligations and deadlines are clear before the business closes.
We can help you prepare
Need help? Contact us and we can help you to make plans for the Christmas shutdown period.
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