As we approach the January 26 public holiday, debate is intensifying regarding the celebration of Australia Day and whether the date of our national holiday should be changed. In response to this issue, an increasing number of employers are providing their employees with the option to work on January 26 and to take another day off in its place, including Deloitte, KPMG, Spotify, Channel 10, Telstra, Woolworths and Wesfarmers.

If you are considering a request to swap the January 26 public holiday, or considering providing your employees with the option to do so, there are a number of legal issues to keep in mind.

The default position under the law is that all employees are entitled to be absent from work on a public holiday, and for permanent employees, to be paid for that absence for the ordinary hours they would have worked.

Of course, employers do have the right to request that an employee works on a public holiday (see our related article here about requests for employees to work public holidays), however employees must receive any additional pay or entitlements set by a relevant modern award or enterprise agreement in return. But what happens to those entitlements if an employer and employee agree to “swap” the public holiday?

Award/enterprise agreement-free employees

For employees who aren’t covered by any modern award or enterprise agreements, the answer is simple. The Fair Work Act 2009 is clear that employers and their employees who aren’t covered by any industrial instruments are free to agree to substitute a day for a day that would otherwise be a public holiday.

What happens to penalty rates and other entitlements for award/enterprise agreement-covered employees?

If an award or enterprise agreement sets specific entitlements for working on a public holiday (such as public holiday penalty rates), an employer and employee can only substitute another day for the public holiday, together with the specific entitlements, if the instrument itself allows it.

For instance, the General Retail Industry Award and the Clerks (Private Sector) Award allow the substitution of shifts or part-shifts, and days or part-days respectively, that would otherwise be on a public holiday, so that the replacement shift or day is the new shift or day which attracts penalty payments. The Social, Community, Home Care and Disability Services Industry (SCHADS) Award was amended with effect from 11 September 2023 to permit the substitution of days or part-days that would otherwise be a public holiday. In a contrasting example, the Medical Practitioners Award does not provide for the substitution of public holidays at all.

In practice, where an Award or enterprise agreement allows public holiday substitution, this means that employers will not need to make public holiday penalty rate payments to employees who request to work on January 26 and take a different day as a public holiday. The January 26 public holiday can simply be treated as an ordinary day of work (without penalties) with the substituted day being the day the employee is entitled to take off or be paid penalty rates if work is performed.

If a relevant industrial instrument does not provide for the substitution of public holidays, of course, this does not prevent an employer and employee from agreeing for the employee to work the public holiday, and take a different day off instead. However, the employee will be entitled to access any public holiday entitlements (such as penalty rates) for working on January 26, in addition to being entitled to taking the substituted day off – making this a financially unattractive option for employers.

What else should employers keep in mind?

If you are considering changing rostering arrangements to accommodate public holiday swaps – on top of what we have already said, employers should continue to keep in mind all the usual considerations that go with rostering changes, such as minimum break times between shifts.

Key takeaways

When considering requests to substitute the January 26 public holiday, or when reviewing your organisation’s own policy in relation to public holiday swaps, it is crucial to be across the industrial instruments that apply to your employees, your employees’ entitlements in connection with public holidays, and what those instruments allow you to do in terms of substitution.