Everyone
Annual closedowns and holidays
If a workplace has an annual closedown, employees may be required to use some of their annual holidays during this time.
What is an annual closedown?
An annual closedown is the regular closure of a business for a holiday period or seasonal break, requiring its employees to take annual holidays or unpaid time off. Annual closedowns often happen over Christmas, but some industries have closedowns at the end of a particular season.
A closedown can occur:
- across an entire workplace
- for part of an organisation – for example, where a factory closes for maintenance while the office stays open
- for different parts of a workplace at different times.
An employer must give their employees 14 days’ notice before an annual closedown.
A closedown can also occur when the business stays open but the employer temporarily discontinues work for 1 or more employee. For example, this could happen when a customer service centre stays open between Christmas and New Year's but has fewer employees working than usual. In these situations, the employer may choose not to use the closedown provisions and instead provide other types of leave such as agreed annual holidays or contractual leave.
If the employer chooses not to use the closedown provisions but wants 1 or more employees to take annual holidays, see Managing annual holidays.
If an employee is entitled to annual holidays
If, at closedown time, an employee has annual holidays they’re able to use, they must do so (as long as they get 14 days’ notice). Payment for these annual holidays is calculated in the usual way.
If they do not have enough leave to cover the whole closedown period, then:
- their employer can choose to also let them take annual holidays in advance, or
- they may have to take leave without pay (or another form of leave that they agree with their employer).
Mayce has been working for Erin for 2 years. The workplace has an annual closedown of 4 weeks, for most of January each year. Mayce gets 4 weeks’ annual holiday each year, but she has already taken 2 of these weeks in advance on an overseas trip, so she will only have 2 weeks’ annual holiday entitlement at the time of the closedown.
Like all the other employees in the workplace, her anniversary date for annual leave has been set at 22 December. Mayce asks Erin if she can take 2 weeks’ annual leave in advance at the time of the closedown this year so that she will have enough annual leave to cover the entire closedown.
Erin considers Mayce’s request and tells her she can only take 1 week of annual holidays in advance, because if she took 2 weeks in advance this year, the following year Mayce would only have 2 weeks’ annual holidays to cover the next closedown.
By agreeing only to 1 week of annual holidays in advance this year, Mayce gets 3 weeks’ total annual holidays (2 weeks’ entitlement and 1 week taken in advance) this year and will only have to take 1 week’s unpaid leave to cover the closedown. Mayce will still have 3 weeks’ annual holidays left for the following year’s closedown.
If an employee is not yet entitled to annual holidays
An employee may not yet be entitled to annual holidays at the start of the closedown if they’ve:
- not worked for their employer for 12 months continuously, or
- taken unpaid leave of more than a week and this has moved forward their anniversary date for annual holidays entitlement, or
- at some time, received pay for their annual holidays on a pay-as-you-go basis.
Pay-as-you-go annual holiday payments
If this is the case, their employer must:
- Pay them 8% of their gross earnings as at the closedown date
Before a closedown starts (or, in their normal pay cycle, if this has been agreed in their employment agreement), they must be paid an additional 8% of their gross earnings up to the closedown date, from:- the start of their employment, if they’ve not worked for their employer continuously for 12 months, or
- their last anniversary date for annual holidays, if they’ve already worked for their employer for at least 12 months – minus any amount already paid as 8% pay-as-you-go, or already taken as annual holidays in advance.
An employee could also agree with their employer to take some annual holidays in advance.
- Move the anniversary date for annual holiday entitlement
The anniversary date for their annual holidays entitlement will be moved to the date the closedown starts (or another nearby date that their employer chooses) – meaning they’ll receive their next leave entitlement 12 months from this date.
Kenny started working for his employer Tania on 15 September. Two months later, at the beginning of November, Tania gives notice to all her employees that the workplace will have its regular annual closedown from 24 December until 5 January.
Tania must pay Kenny 8% of his gross earnings from 15 September until 23 December. This amount is similar to one week’s pay for Kenny. Kenny is worried about how he will cope financially for the rest of the closedown as he was out of work for a while before working for Tania.
Kenny asks Tania if he can have 1 week of annual holidays in advance to tide him over. Tania says this is ok but reminds Kenny that this will mean the next year he will have only 3 weeks of annual holidays.
Tania also reminds Kenny that she will need to move his anniversary date for the calculation of annual holidays. This means Kenny would not have any annual holiday entitlement available until the following December. Kenny is fine with this, and he and Tania agree to the week’s annual holidays in advance in writing.
Kenny’s anniversary date for annual holidays would normally be moved forward to 24 December (the start of the actual closedown period), but Tania chooses to make the date 17 December so that every year her employees will be entitled to annual holidays at the start of the closedown period.
This means Kenny will be entitled to 4 weeks’ annual holidays (less the week taken in advance) from 17 December the following year.
Closedowns that are not regular or annual
An employer may have closedowns that are not regular annual closedowns, in which case they will need to agree with their employee how such closedowns will be treated, and what annual holiday arrangements will apply.
The employer can only require their employees to take annual holidays for another type of closedown if they have:
- been unable to reach agreement about when their employee will take annual holidays, and
- given their employee 14 days' notice, and
- annual holidays they are entitled to take (not annual holidays in advance).
Alternatively, they could make other arrangements with their employees – for example, they might choose to continue to pay their employees but not require them to attend work.
The date of the employee’s entitlement to annual holidays is not affected by a second or subsequent closedown.
Other leave options during a closedown
If a public holiday, sick leave, bereavement leave, or family violence leave occurs during a closedown, they have the same effect on annual holiday entitlement as they do when annual holidays are taken at any other time.
During a closedown, the employer and employee may agree to use other types of holidays or leave such as alternative holidays or any other form of leave (with or without pay) not provided by law.