Christmas shutdown pay: how to fund wages, leave and the January gap

Closing the doors between Christmas and New Year feels like a break for everyone, and it is, except for your bank account. Wages, leave pay and public holiday pay all keep going out while sales stop, and the first weeks of January are often slow to rebuild. This guide covers what you can and can’t require of staff, the date to put in your diary this month, and how to size and fund the gap.

Can I make my staff take annual leave over the shutdown?

Not automatically. Fair Work Ombudsman guidance says an employer can only direct employees to take annual leave during a shutdown if their award or enterprise agreement has rules allowing it. Where no award or agreement applies, the direction is allowed if it is reasonable.

That means your first job is to open the award that covers your staff (the Fair Work Ombudsman has an award finder) and look for a “close-down” or “annual leave” clause. Awards differ on notice, on how much leave can be directed, and on what happens to people without enough leave. Don’t announce a shutdown on assumption; a wrong direction can leave you paying wages for days you thought were covered by leave.

What is the notice date to diarise?

Where shutdown directions are allowed, most awards require at least 28 days’ written notice, though some let you give shorter notice if the majority of affected employees agree. The Fair Work Ombudsman publishes a notice template for temporary shutdowns.

Count back from the day you plan to close. If you shut on Monday 21 December 2026, 28 days earlier is Monday 23 November. Anything you decide after that date may need agreement rather than direction. Put the notice date in your calendar now, and give everyone the notice in writing.

What happens to public holidays inside the shutdown?

Christmas Day 2026 falls on a Friday and Boxing Day on a Saturday, with substitute days in many states, and New Year’s Day 2027 falls on a Friday. State dates differ, so check your own state’s list.

The rule that catches employers out: a public holiday that falls during annual leave is not counted as leave. The employee is paid for the holiday and their leave balance isn’t reduced for that day. If your payroll software deducts leave for those days, your staff are being short-changed and you carry the back-pay risk. Check the setup before the first shutdown pay run.

What if someone hasn’t got enough leave?

A new starter with three days of leave doesn’t cover a ten-day close. Your options are:

• Leave in advance or leave without pay, but only by genuine agreement with the employee, and subject to your award or agreement.
• Keep paying ordinary wages for the uncovered days, which is the default if no agreement is reached.
• Offer work: a stocktake, deep clean or maintenance job for a few days.

Casual employees are different. They have no paid annual leave, so there is generally no leave pay when there are no shifts, but working casuals still receive the correct rates if they work on a public holiday.

How big is the cash gap, really?

Use a short worksheet, in dollars. The figures below are an example only.

Item	Example
Wages for shutdown days (leave and holiday pay)	$18,000
Super on those wages	included in pay run
Rent, leases, insurance, subscriptions (continuing)	$9,000
Supplier invoices due as you reopen	$12,000
Sales during the shutdown	$0
Cash already set aside	$20,000
Gap before January sales arrive	$19,000

Two items trip owners up. First, leave pay is paid at the employee’s rate, and many awards add a loading on top, so shutdown weeks cost more than a normal week of the same hours. Second, from 1 July 2026 Payday Super means super must be paid with wages, not quarterly, so the super on your leave pay leaves the account in the same pay run. Our guide to Payday Super and your cash flow explains the change.

Then look at income: in many trades and retail businesses, January billing lags work done, and customers pay 30 to 60 days after invoices go out. A 13-week cash flow forecast built from now to the end of February shows exactly which week bottoms out.

Wondering whether the gap is one you should fund or fix? You can check your options in 60 seconds. No credit check when you enquire.

What can you do before you borrow?

Cheap moves first, because they cost nothing to try:

1. Invoice early. Send every job invoice before the shutdown, not after. Shorter terms in December help.
2. Stagger leave. If your award allows it, a partial shutdown (reopen on 4 January rather than 11) shrinks the bill.
3. Pre-negotiate suppliers. Ask for terms that start after you reopen. See negotiating supplier terms.
4. Use the quiet days. Do stocktakes and maintenance with a skeleton team to avoid paying staff to do nothing.
5. Ring a few customers with overdue invoices in the week before you close. Our collections routine is worth running now.

What if you stay open and pay penalty rates instead?

Some businesses, such as cafes, pubs, tourism operators and retailers, trade right through. They don’t face a shutdown gap, but they face a penalty-rate one. Working on a public holiday attracts the public holiday rate in your award, which is often well above the ordinary rate, so a busy day can cost more in wages than it earns if you staff it the way you would a normal Saturday. Before you roster, compare each public holiday’s expected takings with its wage bill. If a day only breaks even, a shorter trading window or a smaller team may beat opening full. And remember the money arrives later than the wages: card takings settle in a day or two, but the January quiet that follows a busy December can leave a hole in the second and third weeks of the new year. That is the one a forecast will show you before it happens.

When does short-term funding make sense?

If the worksheet still shows a gap after those moves, short-term funding can cover it. It makes sense when:

• the gap is temporary and you can see where repayment will come from (January invoices, reopening trade);
• the repayments suit your cash pattern, so test the weekly amount against your slowest January week;
• the term is matched to the purpose: a gap lasting eight weeks shouldn’t be funded over five years. See matching the loan term to the purpose.

It makes less sense if the business has been losing money for months. In that case the shutdown is exposing a bigger problem, and borrowing delays it rather than solving it. If that sounds familiar, read warning signs your business debt needs restructuring.

The best timing is early. Lenders and teams are also busy in the last week of December, so a December enquiry may not leave time to run through everything. Our guide to how fast a business loan can be funded shows where the time goes. For the seasonal pattern more broadly, see seasonal cash flow and payroll funding.

A simple timeline from now to January

• This week: read your award; draft the shutdown notice; confirm which days are public holidays in your state.
• By late November: give written notice; build the 13-week forecast; chase overdue invoices.
• Early December: decide whether any funding is needed and enquire, rather than waiting for the last pay run.
• Last pay run: check payroll is not deducting leave for public holidays and that super is paid with wages.
• First week back: invoice immediately; reopen with a buffer, not a hole.

Plan the January gap while there’s still time

Most owners we speak to leave this until the week they close, when options are fewer and every conversation feels urgent. Planning in early November gives you room to choose calmly. If your forecast shows a hole, we can help you work out whether a short-term facility, a line of credit or a smaller top-up suits your January.

Enquiring takes about 60 seconds and won’t affect your credit score. We don’t send your details out to a pile of lenders; one real person reads your enquiry, looks at your situation and calls you. Please fill the form in accurately, including your real turnover and what the money is for, so we can match you to the right option the first time.

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