Requiring Employees to Take Annual Leave

The Employment Court recently issued a decision relating to whether employers were entitled to require employees to take annual leave during the Covid-19 lockdown in April 2020. Three employees brought a case against Carter Holt Harvey LVL Limited ("the Company") after the Company told staff that they would need to take eight days leave during the lockdown in April 2020.  

The Court found the Company made no attempt to reach agreement with its staff over taking leave and it was not entitled to require workers to take their annual leave or any other type of leave.

Although the lockdown is well and truly over, employees are able to file wage arrears claims for up to six years from the date of any accrued benefits. This means there may be many more claims to come and the decision also sets a precedent for employers moving forward.

Background

On 23 March 2020, the same day as the Government announced New Zealand would go into a Level 3 lockdown, followed by a Level 4 lockdown on 25 March, the Company sent an email to all employees informing them that they would need to take eight days leave in the following order: annual leave, accrued leave, entitled long service leave, alternate days and unpaid leave. The Company made the decision knowing it was not an essential service and that the majority of its staff would not be able to work.  

The Company said it wanted to ensure employees had clarity and certainty about its intended approach to their pay during Alert Level 4 and wanted to do that prior to the lockdown.

The primary issue for the Court was whether the approach of the Company was in accordance with the Holidays Act 2003.

The Holidays Act provides that if an employer and employee are unable to reach agreement as to when the employee will take his or her annual holidays, an employer must give the employee not less than 14 days' notice of the requirement to take annual holidays.

The Court had to determine what was required of the Company in attempting to reach an agreement and whether the lockdown changed this requirement due to exceptional circumstances.

The Company argued that it was unable to reach agreement on the timing of holidays because there was simply no time or capacity for it to do so. Ultimately, the Court found that the Company made no attempt to engage with its employees and should have taken the time to obtain employee agreement, before requiring the employees to take leave.

Take home tips

• If you need employees to take annual leave, you must firstly try to reach an agreement with them about their leave.

• If you are not able to reach agreement, you must consult with the employee about taking annual leave, and allow any feedback before requiring the employee to take annual leave. Agreement is not needed. You give no less than 14 days' notice of the requirement to take leave.

• If you required employees to take leave during the lockdowns, and did not first attempt to reach an agreement in relation to taking leave, employees can still bring a claim for wage arrears.

If you need any assistance with the above, please contact:

Melissa Johnston (Partner) on (09) 306 6729 (mjohnston@mcveaghfleming.co.nz)

Hiruni Wijewardhana (Solicitor) on (09) 262 4940 (hwijewardhana@mcveaghfleming.co.nz)

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Employment Law

Written by Melissa Johnston