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Holidays & Paying Staff over the Xmas period

Published 02 Dec 2016

Employees should be paid for any Christmas and New Year’s public holiday that falls on a day which the Employer would otherwise be working (this includes employees who are on a ‘closedown’ period).

Under Mondayisation legislation, public holidays that fall on the weekend can be ‘moved’ to the following Monday or Tuesday.

This year both Christmas Day (25th December) and New Year’s Eve (1st January) fall on Sunday.

The Mondayisation legislation states that:

  • If one of the Christmas or New Year public holidays falls on a Sunday, and the employee normally works on Sunday, the public holiday will be on the Sunday for that employee.  
  • If one of the Christmas or New Year public holidays falls on a Sunday, and the employee does not normally work on a Sunday, then that public holiday will be observed on the following Tuesday for that employee.

If an employee would normally work on the Sunday which the holiday actually falls their public holiday benefits will apply to that Sunday calendar date.

If an employee does not normally work on a Sunday, then the employee’s public holiday will be moved to the next Tuesday (27th December and/or 3rd January).

Where employees work both the Sunday and the possible Tuesday, they will receive their public holiday benefits for the Sunday.  They are not entitled to two public holidays for each occasion. This can mean that the holidays fall on different days for employees who have different work patterns.


Many businesses will operate a closedown over the Christmas and New Year period.  Most employees will take annual holidays during this closedown. However, employees that have been working for the company for less than 12 months will not as yet be entitled to take annual leave.

Employees who have not worked for 12 months have been accruing 8% of their gross earnings to date (less any annual holidays paid in advance) as holiday pay.

This (whole) sum must be paid to the employee at the start of the closedown (unless the employer has agreed to pay holidays in advance of entitlement).

If the 8% holiday pay doesn’t cover the whole closedown they will remain unpaid for the rest of the closedown. When you pay out the entire holiday pay entitlement at 8% in this manner the employee’s annual holiday entitlement date changes to the first day of the closedown (or a date reasonably close to it). This means that they will not become entitled to annual holidays until the next annual closedown but they will then be taking annual holidays.

Some companies fix the date in early December. This means that there is a common annual holidays’ entitlement date for all employees and, after the first year, employees are using annual holidays’ entitlement over the Christmas closedown.

As an alternative, you may agree to pay annual holidays in advance, instead of 8%.  This means that the employer advances annual holidays and, if this occurs, the days will be debited from the entitlement that arises on the employee’s actual anniversary.  The annual holidays date does not therefore change.

The Holidays Act 2003 does not give the employer the right to impose a common holidays’ entitlement date, except where a closedown occurs.
Employers need to remember to give at least 14 days’ notice of a close down and the requirement to take annual holidays or discontinue work.

For more detailed information on this or other payment matters see our eBook Annual Holidays & Leave. This is available to buy online or download for members from the Library section of the Employers Toolbox.