The holiday season is getting close and for some employers, this may mean a business closedown requiring some, or all, employees to take annual leave during this period. Before getting started, make sure you’re aware of your obligations as an employer.
Customary vs Non-Customary Closedown
A customary closedown may occur at any time during the year, either for a holiday period or seasonal break and may impact the whole company, or just a department. During a customary closedown, an employer will require their employees to take the time off as annual leave. This is fine if the employer meets the requirements of the Holidays Act 2003.
A non-customary closedown, or shutdown, can also occur at any time during the year and may impact the whole company or just a department. However, this type of closedown does not regularly happen, or is not ‘customary’. As such, it is not known as a closedown period when considering the Holidays Act 2003, and the employer does not have rights regarding employee leave. Accordingly, the employer cannot require employees who are not entitled to leave to stop working.
Employees Entitled to Annual Leave
Employees with entitlement to annual leave may be directed to take the time off as annual leave, if the employer gives them at least 14 days’ notice of this requirement. However, employers should always review their employment agreements to make sure they’ve not agreed to a longer notice period, and if there is a clause regarding closedowns, this should be followed.
For those employees who are part of a collective agreement, employers should make sure they comply with the requirements stipulated in the collective agreement. This may mean additional notice is provided to employees.
Where an employee doesn’t have enough annual holidays entitlement to cover the whole closedown period, the employer may agree to let them take some annual holidays in advance, some leave without pay, and/or use another form of leave.
Employees Without Annual Leave Entitlement
Where an employee is not entitled to annual holidays when the closedown starts, special provisions apply. The employee must get paid 8% of their gross earnings as at the closedown date from:
- the start of their employment with the employer if they haven’t yet worked continuously for 12 months, or
- their last anniversary date for annual holidays if they have already worked for the employer for at least 12 months, less any amount already paid as 8% pay as you go or already taken as annual holidays in advance
- the employer and employee may agree that the employee will take some annual holidays in advance
- the employee’s anniversary date for annual holiday entitlement purposes is moved to the date the closedown starts, or, in certain situations, an alternative date close by as nominated by the employer.
As casual employees are not entitled to annual leave, there should be no issue with them during a closedown period.
Public Holidays and Other Types of Leave
If a public holiday falls during a closedown, the employer will need to decide if the day would have otherwise been a working day for the employee. If so, then the employee is entitled to take the day as a public holiday. The same applies if the employee wants to take sick leave, bereavement leave or an alternative holiday during this period.
If you are an employer who may regularly require a closedown during your business operations, we recommend you ensure your employment agreements specify how this arrangement will apply. This should discuss options for customary closedowns and non-customary closedowns.
If you’re still unsure of your obligations as an employer, feel free to contact us on 0800 4 POD HR.
We can assist you with writing a clause that will ensure your business is covered for all your closedown needs. We also offer complimentary reviews of your existing employment agreement templates.
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