6 things you need to know about Christmas shutdowns

As we get closer and closer to the end of the year and the festivities start, employees and employers alike start to wonder what they’ll do with their well-deserved time off. While this time is exciting for staff who want a break, it can often be stressful for employers. Trying to navigate Christmas shutdown leaves and entitlements can be complex. But don’t worry, we’ve got you covered.

In this article, we’ll answer six important questions about the close-down period, so you can enjoy the break stress-free!

 1. What is a closedown?

A closedown is when a business decides to partially or fully stop operating to give staff a break.

An employer can have one closedown per year and must give at least 14 days’ notice prior to the closedown. If an employer wants a secondary closedown during the year, they must have an agreement with employees, including the terms of the second closedown.

2. How do I pay staff over a closedown?

Employees affected by a closedown must either stop working, be paid annual leave or be paid eight per cent of their gross earnings (depending on the circumstance).

• If an employee has entitled annual holiday balance, they can be asked to take annual holidays for the duration of the closedown period. If their entitlement doesn’t cover the entire period, both parties can agree to let the employee use leave in advance (‘accrued leave’).
• If an employee doesn’t have any entitled leave, they must be paid eight per cent of their gross earnings since either the start of their employment or their last anniversary date, minus any amounts already paid in advance (including any “pay as you go” loading).
• A closedown for an employee without entitled annual holidays is unpaid by default unless both parties agree to leave in advance.

However, we don’t recommend allowing leave in advance to be used when there’s no leave balance because an employee might not return after the closedown, which means an employer may not be able to recover the funds, or it will be too costly to do so.

3. What are the key public holidays?

You’ll need to know the key public holidays that are usually during the closedown period. (December 2024 – January 2025). These are:

4. How do you pay public holiday leave?

Public holidays must be paid as and treated as public holidays, even if they occur during a closedown period or when staff are on annual holidays.

This year there are no public holidays falling on a weekend, which means there’s no public holiday to be realised on Monday or Tuesday for employees who usually work weekdays. What this means is if your closedown period includes the four public holidays, employees will receive public holiday pay, not annual leave pay, for those days. This should be considered when managing your employees affected by a closedown and their annual holidays.

If an employer doesn’t have a closedown or the closedown doesn’t cover a period with a public holiday, an employee will either:

• be paid a public holiday on their otherwise working day for not working;
• be paid time and a half for working on a public holiday and get an alternative day off if the work is being done on an otherwise working day; or
• simply enjoy the day off without pay if the public holiday doesn’t fall on an otherwise working day.

5. How do I manage annual holidays after the closedown?

 If an employee is affected by a closedown, the annual holiday anniversary date is moved to the start date of the closedown. This could result in an employee never reaching an entitlement and always being paid eight per cent each closedown. To prevent this, an employer should choose a date reasonably close to the actual commencement of the closedown. For example, the week prior. This ensures it’s always before the closedown every year.

6. What about other leave?

If an employee notifies the employer of sick, bereavement or family violence leave, the employer must determine whether the day concerned would otherwise be a working day for the employee. If it would be a working day, then the employer must change the annual holiday leave to the relevant leave being taken (or must if contracted or customary practice).

 Citation HR can help

We know that employment law and compliance can be confusing, especially regarding Christmas closedowns, annual holidays and public holidays. If you want a software system and human help to lean on, talk to the team at Citation HR. If a question comes up during this busy period, you can book a complimentary call with our experts here.