Can my employer close down over Christmas and make me take annual leave?

Under New Zealand employment law, many employers can close down over the Christmas/New Year period, or another holiday or seasonal period, and require staff to take annual leave or unpaid leave during that time. But certain rules must be followed.

An employer is allowed to have an annual close down where all, or part, of the workplace temporarily shuts down, often over Christmas/New Year.  If the close down is the customary, regular yearly close down, the employer can require you to use your annual leave during that time.  The law requires at least 14 days’ notice of the close down dates.

What happens if I don’t have enough annual leave accrued? 

If you don’t have enough annual holidays to cover the full close down you may end up either taking some of your leave in advance, if your employer agrees, or taking unpaid leave (or another agreed leave type) for the balance.

There are a few scenarios here, depending on how long you’ve worked and your leave balance:

You’ve worked less than 12 months

If at the time of the close down you aren’t yet entitled to annual holidays, because you haven’t completed a full 12 months, the Holidays Act 2003 requires that, if you are required to stop work, you are paid 8% of your gross earnings since starting.

You’ve got some leave but not enough to cover the full close down

In that case, your employer might ask you to:

• take your remaining annual leave, and

• take additional leave in advance (if employer agrees), or

• take unpaid leave (or other agreed leave) for the remainder.

And if unpaid leave is agreed, this may push out your anniversary date for when you next become entitled to 4 weeks’ leave affecting future leave accrual. 

What if you want to keep working during the close down?

If your employer has announced a close down, and gives you at least 14 days’ notice, they can require you to stop working.

If you are willing and able to work,and the workplace is still able to operate, but the employer insists on close down, you might be able to negotiate with them. However, legally the employer can enforce the shutdown and require leave or discontinuation of work.

If there is no close down clause and it’s not a regular custom, then hours or work availability would be a matter for agreement. Employers can’t force you to stop working in those circumstances without agreement.

Why do many employers close down over Christmas?

There are a few reasons many employment agreements include a “close down clause” for a regular break:

• Christmas and New Year is a common slow period with fewer customers and lower demand for services.

• Close downs let businesses plan downtime, maintenance, or just give staff time off when many want or need a break.

• For many staff, taking annual leave at this time is expected, so it becomes the “usual” holiday time.

FAQs

My boss says the business will shut from 23 December to 5 January, and I’ll have to use up my annual leave. Is that fair?

Yes.  That is potentially fair and lawful if the employer gave at least 14 days’ notice, and it’s a regular annual close down custom.

I only started working 4 months ago.  Do I risk losing pay over Christmas if there's a shutdown?Not exactly. If a close down applies and you’re not yet entitled to annual holidays, your employer must pay you 8% of your gross earnings since you started (or since last entitled), instead of holiday pay.

I’ve got 1 week of annual leave, but the shutdown is 2 weeks.  What happens?

Your employer can require you to use that 1 week of annual leave, and for the other week ask you to either take leave in advance or take unpaid leave for the remainder.

I want to work during the Christmas break. Can I ask to?

You can ask, but if the employer has lawfully invoked a close down with notice, they can require you to stop working, even if you are willing and able.

What about public holidays like Christmas Day, Boxing Day and New Year’s Day?

If those days fall during a close down and you would normally work on those days, then those public holidays still count and you should be paid accordingly, not have those days deducted from your annual leave.

Many employers in New Zealand lawfully shut down over Christmas and require staff to use annual leave, unpaid leave and/or holiday pay, but only if they provide at least 14 days’ notice and follow the rules under the Holidays Act 2003.

If your workplace is closing down over Christmas and you don't think your employer is following the rules, get in touch for a free consultation. MathewsWalker.co.nz | 0800 612 355