Closing down over Christmas and managing annual leave

The bells are ringing, Christmas is near and the long awaited closedown and rest is nearly upon us. Before your employees go on holiday for the closedown period, there are a few rules you need to be aware of. We have set out some scenarios below, and the most commonly asked questions.

Can we enforce a closedown of our workplace at Christmas?

The Holidays Act 2003 specifically provides for annual 'customary' closedowns. A closedown period can be enforced where there is a clear custom and practice of a closedown period in the workplace or where they are provided for in the employment agreement.

The requirement that the closedown is a 'customary' closedown means that employers who have not had a closedown period must seek the agreement of their employees on the arrangements for a closedown.

Employers can have one closedown per year, provided that they give 14 days' notice to all employees before the shutdown commences.

What happens if an employee is not yet entitled to annual leave?

In this situation, employees should be paid 8% of their gross earnings from the start of their employment up until the commencement of the closedown period (less any payment already taken for annual leave). The employee's anniversary date, for annual holiday entitlement purposes, then moves to the date of the start of the closedown period. In addition, the employee and employer may agree that the employee takes leave in advance for some or all of the closedown period.

What happens if the employee does not have enough leave?

If an employee does not have enough leave to cover the closedown period, an employer and employee can agree that the employee can take leave in advance or leave without pay.

Note: if an employee is allowed to take leave in advance, there could be a risk to the employer if the employee leaves their employment before the leave in advance is repaid. To avoid this risk, it is best to get written consent from the employee to deduct any unpaid amount of leave in advance from their final pay.

What happens with public holidays this year?

The public holidays are Monday 25 December (Christmas Day), Tuesday 26 December (Boxing Day), Monday 1 January (New Year's Day) and Tuesday 2 January (Day after New Year's Day).

If the public holiday falls on an otherwise working day, the employee is entitled to a paid day off; or if the employee works they are entitled to time and a half, and an alternative day off.

If the public holiday is not an otherwise working day, and the employee works, they are entitled to be paid time and a half, but they are not entitled to a day in lieu.

It's important to get the payment of public holidays right.  

If you would like to discuss managing annual leave or other matters related to this article, please contact:

Email: mjohnston@mcveaghfleming.co.nz

DDI: 09 306 6729