Managing Employee Leave Over the Christmas Period

Managing Employee Leave Over the Christmas Period

It’s that time of year again, Christmas is upon us. Many workplaces in New Zealand will be planning their annual closedown over the Christmas period, or thinking about employee entitlements. We have set out some common questions we are often asked at this time of the year.

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 are able to have one closedown per year, provided they give 14 days’ notice to all employees before the shutdown commences.

Can I require my employees to take annual leave during the closedown?

If an employee is entitled to annual holidays at the commencement of the closedown period, an employer can require the employee to take annual leave. As above, at least 14 days' notice of the closedown must be given to employees.

What happens if my employee does not have enough leave for the whole of the closedown?

If an employee’s annual leave does not cover the whole of the closedown period, the employee and employer can agree that annual leave is taken in advance. The employee would have a negative leave balance.

What about employees who have worked for less than 12 months, and may not have accrued enough annual leave to get them through the closedown?

A recent employment case (Metropolitan Glass & Glazing Ltd v Labour Inspector, Ministry of Business and Innovation and Employment [2020] held that employees with no holiday entitlement must 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 date. In addition, the employee and employer may agree that the employee takes leave in advance for some or all of the closedown period.

The decision is under appeal.

How do I calculate pay for public holidays over the Christmas period?

The Holidays Act 2003 stipulates the calculations to be made for public holidays. We have set out scenarios below.

If an employee does not work on a public holiday which would otherwise be a working day, they are entitled to be paid. The employee is entitled to payment at not less than the employee’s relevant daily pay or average daily pay for that day.

If an employee works on a public holiday that would otherwise be a working day for the employee (ie it falls on their regular work day), the employee is entitled to be paid time and a half and receive an alternative holiday (day in lieu). Payment for time and a half is calculated as the greater of the employee's relevant daily pay ("RDP") or average daily pay (less any penal rates) ("ADP") for the time actually worked plus half that amount again; or the portion of the employee's RDP that relates to the time actually worked on the day.  

If an employee works on a public holiday which would not otherwise be a working day, they are only entitled to payment of time and a half for the actual hours worked.

Can I require an employee to work on a public holiday?

An employee can be required to work on a public holiday if the public holiday falls on a day they would have otherwise worked, and their employment agreement provides for the employee to work on a public holiday.

What if an employee falls sick or loses a loved one during the annual holiday period?

If an employee is on annual leave and becomes sick, the employer can use their discretion as to whether they agree to treat the leave as sick leave.

If an employee is on annual leave and suffers a bereavement, the employer must allow the employee to take bereavement leave for the relevant period.

Please direct any enquiries to:

Melissa Johnston (Partner) in the Employment Team on (09) 306 6729 (mjohnston@mcveaghfleming.co.nz)

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© McVeagh Fleming 2020

This article is published for general information purposes only.  Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.  If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.