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Christmas checklist for holiday period

Closedown checklist

A ‘closedown’ happens when a business customarily shuts down all or part of its operation for a specified period, for example over Christmas and New Year, or at the end of a regular season. Since these are customary closedowns they are usually – and advisably – be referred to in the company’s code of conduct manual or as a clause in their Employment Agreements.

Such planned closedowns may only take place once a year and in these instances the employer may require employees to stay away from work during the period of the closedown, even where this needs to be taken as unpaid leave if they do not have enough accrued or entitled holidays to be able to cover the whole closedown period. Employees must be given at least 14 days’ advanced notice of the closedown.

If you wish to consider closing your business (for example on the Fridays between the public holidays and the weekend) but your business does not customarily have a closedown and therefore you do not have any Policy or relevant clause in your Employment Agreements, you can still do so. In these cases however you will first need to consult with your staff about your proposal and then give them at least 14 days’ notice of your decision to go ahead and close for those days. The earlier this is done the better it is for individuals to plan ahead, so if you already think that this may be a good idea for your business then it may be best to go ahead and have the discussion.

Three options for employees who do not have enough annual leave entitlement for the closedown:

Option 1: Allow them to take leave in advance, which is then deducted as it accrues over the following months. The risk associated with allowing them to take leave in advance is that they may terminate their employment with you before they have accrued enough leave to ‘pay it back’.   It is important that you have in writing that you may deduct money from the employee’s final pay, if the employee has not accrued the leave before leaving the organisation.  A clause covering deductions for leave taken in advance of entitlement is covered in the standard HRtoolkit employment agreements.

 Option 2: Alternatively they may agree to take unpaid leave for all or some of the closedown days

 Option 3: For employees with less than one year service – you can choose to pay them 8% of the employee’s gross earnings since the commencement of their employment up to the start of the closedown, less any annual leave taken in advance. The balance of the period of the closedown would then be taken as unpaid leave. In this case, the date of the start of the closedown (or another more convenient date close to this) then becomes the employee’s new annual leave anniversary date, so that by next years’ closedown they would have a full 4 weeks’ entitled leave (less any leave taken in advance during the year).

 Staff cover and public holiday payments

There are four public holidays over the Christmas/New Year period – Christmas Day, Boxing Day, New Year’s Day and the second of January. Payment for public holidays is at relevant daily pay (RDP) or average daily pay (ADP).   Relevant daily pay is what the employee would have earned if they had worked the day. Where this isn’t possible or practicable to calculate, employers can use the average daily pay (ADP) calculation which is an averaging calculation over the previous 52 weeks using the number of days worked or on leave (which is where it differs from annual leave calculations).

If an employee works a public holiday they are entitled to be paid at time and a half of their RDP or ADP for the hours they work, plus their normal rate for any additional hours they would normally work but didn’t because it was a holiday. For example, if a store would usually be open from 9am to 9pm on a Wednesday and the employee would normally work a 12-hour day but only works 10 – 4 on Christmas Day, they are entitled to payment for six hours (time worked) at time and a half, and six hours (normal hours not worked) at RDP or ADP.

Here is a quick summary of entitlements below:

Worked the public holiday

  • Paid time and a half of RDP or ADP for time worked. Balance of normal hours at normal rate.
  • Receive an alternative holiday.

Don’t work the public holiday

  • Paid normal hours at RDP or ADP. No alternative holiday.

 Not an otherwise working day

Worked the public holiday

  • Paid time and a half of RDP or ADP for time worked. Balance of normal hours at normal rate.
  • No alternative holiday.

Don’t work the public holiday

  • No entitlement.