The Christmas season is a hectic time for most of us.  Work and personal commitments escalate in the mad rush towards Christmas Day. While some industries (such as retail and hospitality) are entering their busiest time of the year, other industries (like construction) look to close down for a period. This article looks at the legalities of Christmas closures and gives a few reminders to employers.

The Law
A closedown period means a period during which an employer customarily closes the employer’s operations or discontinues work and requires employees to take all or some of their annual holidays.[1]

Close downs usually occur over Christmas and New Year, but can happen at any time. A closedown might occur during the year if there is a need, such as servicing a manufacturing plant.

Employers do not have to close the entire workplace; engineers, maintenance or manufacturing employees may need to work while the office closes down. Conversely, the office may operate customer service queries but close down operations.

Notice of closedown
Employers must provide a notice at least 14 days prior to the closedown. While there is no legal requirement to notify in writing, a letter or memo sent to all staff avoids any confusion.

Annual leave
During the closedown the employer can direct employees to take annual leave. Employees with less than one year of service can be paid 8% of their earnings up to the closedown as holiday pay.

If an employee has inadequate leave, any time off during the closedown is unpaid. Employers can agree (at their discretion) to top up the payment by creating a negative leave balance. While this ensures the employee is not out of pocket, it does incur a cost for the employer. If the employee leaves before accruing the leave back, the cost may not be recovered.

As with any annual leave payment, employees can request to have the leave paid out in full and in advance of the closedown. However, it is much more common for leave to be paid in the normal pay-cycle and ideally there is a clause in the employment agreement covering this.

Public holidays
Public holidays are considered paid leave if the day would ‘otherwise be a working day’. This applies to the closedown period as if the closedown is not in effect, meaning employers cannot claim that it is not a working day because business is closed.

5 steps to close down

  • Decide if there will be a closedown
  • Set the dates
  • Notify staff in writing, at least 14 days prior to closure
  • Deal with any issues regarding the closure prior to going on leave
  • Enjoy the break!

From the team at Talbot Law, we hope you enjoy your holiday this year. Should you have any questions regarding close down periods or employment law in general, please do not hesitate to get in touch.

[1] Holidays Act, section 29