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Closedown Rules For Employers

Published 01 Dec 2011

Employees can be required to discontinue work when the company operates a closedown period.

What Is A Closedown Period?

A closedown period means "a period during which the employer customarily closes the employer's operations or discontinues the work of one or more employees and requires his or her employees to take all or some of their annual holidays". Closedown periods might occur for a time over winter for a beach resort or most commonly over Christmas/ New Year.

How Often Can I Have A Closedown Period?

Businesses can only impose one closedown period in each year. However, you can have different closedowns for different parts of the business, such as the factory and the office. Employers are free to agree with employees on any other times when they might take holidays or might discontinue work, or might take unpaid leave.

Closedown Notice

Employers must give at least 14 days' notice of a closedown and the requirement to take annual holidays or discontinue work.

Can I Require Employees To Take Annual Holidays During A Closedown?

Yes, you can require employees to take annual holidays during a closedown whether or not they agree to do so.

Public Holidays during Closedown

Recent changes to the Holidays Act provide that if a Public Holiday falls during a close down period then the day, if its observance falls on an otherwise work day, is paid for and treated as a Public Holiday and not as part of any Annual Holiday.

Advantages for Employers Operating a Closedown Period.

By choosing to operate a closedown period, employers ensure that employees use a portion of their annual holidays at a convenient time for the employer. There are many benefits:
  • less impact on productivity than if employees with key skill sets took holidays during busy periods;
  • reduction in labour cost by not having to temporarily back fill for employees who are on holiday;
  • reduction in plant operating costs (e.g. electricity);
  • maintenance able to be scheduled.