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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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employment

Employment during closedowns (e.g., Christmas)

Key Takeaway

During business closedowns, like for Christmas, employers can require employees to take annual leave if their employment agreement allows and proper notice is given. If employees lack sufficient leave, agreement for advanced or unpaid leave is needed; otherwise, the employer may still be required to pay. Public holidays falling within a closedown are paid if they would otherwise be working days.

Employment During Business Closedowns in New Zealand

Businesses in New Zealand may choose to temporarily cease operations for a period, often around public holidays such as Christmas and New Year. This is commonly referred to as a closedown (a period where an employer temporarily shuts down the business's operations). Specific rules govern how employment, particularly regarding annual leave and public holidays, is managed during such times.

Requiring Employees to Take Annual Leave

An employer can only require an employee to take annual leave (paid time off from work) during a closedown if the employment agreement or a policy agreed upon in the employment relationship permits this [Source: Holidays Act 2003, s 29(1)]. If the employment agreement or policy does not contain such a provision, the employer must obtain the employee's agreement to take annual leave or unpaid leave during the closedown period.

Notice Period for Closedowns

If an employer intends to require employees to take annual leave during a closedown, they must provide at least 14 days' notice of this requirement to the affected employees [Source: Holidays Act 2003, s 29(2)]. This notice must be given before the closedown period begins.

Managing Annual Leave During Closedowns

Employees with Sufficient Annual Leave

If an employee has an accrued annual leave entitlement (the amount of annual leave they are legally entitled to take) and the employer has met the agreement and notice requirements, the employer can direct the employee to use their annual leave during the closedown. This leave must be paid at the employee's ordinary weekly pay or average weekly earnings, whichever is higher [Source: Holidays Act 2003, s 21].

Employees with Insufficient Annual Leave

For employees who do not have enough annual leave to cover the entire closedown period (e.g., new employees who have not yet accrued their full entitlement), the situation is managed by agreement:

  • Annual leave in advance: The employer and employee can agree for the employee to take annual leave in advance of it being accrued [Source: Holidays Act 2003, s 20(3)].
  • Unpaid leave: Alternatively, they can agree for the employee to take unpaid leave for the remainder of the closedown period after any available annual leave has been used [Source: Holidays Act 2003, s 29(3)].

If an employee does not have sufficient annual leave entitlement to cover the closedown period and an agreement for advanced annual leave or unpaid leave cannot be reached, the employer may be required to pay the employee for the duration of the closedown. This is because the employer is directing the employee not to work without a valid leave entitlement or agreement for unpaid leave [Source: Holidays Act 2003, s 29(3) and general employment law principles regarding availability for work].

Public Holidays During Closedowns

If a public holiday (a non-working day observed nationally) falls during a closedown period, and that day would otherwise have been a working day for the employee, the employee is entitled to be paid for that public holiday [Source: Holidays Act 2003, s 50(a)]. This payment is generally at the employee's ordinary rate for a normal working day.

If the public holiday falls on a day that would not otherwise be a working day for the employee (e.g., a weekend for a Monday-Friday worker), then no payment is generally required for the public holiday itself, unless the employee actually works on that day.

If an employee is required to work on a public holiday during a closedown, the specific rules for working on a public holiday apply, including payment of time and a half and an alternative holiday (also known as a 'day in lieu') [Source: Holidays Act 2003, ss 56, 60].

Good Faith Obligations

Throughout any discussions or arrangements regarding closedowns, employers and employees must deal with each other in good faith [Source: Employment Relations Act 2000, s 4]. This means acting honestly, transparently, and being responsive to the other party's concerns, ensuring that agreements are fair and understood by all involved.

When to Seek Independent Legal Advice

Individuals seeking clarity on their specific employment rights or obligations during a closedown, or facing disagreements with their employer regarding leave and payment, may find it beneficial to seek independent legal advice. Information and assistance can be obtained from official government agencies like Employment New Zealand or through Community Law Centres for free legal advice [https://communitylaw.org.nz/].

Key Resources