Shutdown periods

With Christmas fast approaching, here is a brief reminder about closedown periods that often occur during the festive season.

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”.

In New Zealand, a closedown period is likely to occur over the Christmas and New Year period, although this does not have to be the case, and will depend on the circumstances of the business.

Points to note:

  • Businesses can only impose one closedown period per employee each year;
  • The word “customarily” typically restricts the closedown to past practice;
  • Employers must give at least 14 days’ notice of a closedown and the requirement to take annual holidays or discontinue work;
  • If a business has a closedown period, the employer can require employees to take annual holidays during the closedown whether or not they agree to do so.  If an employee does not have enough annual leave to cover the entire closedown they must still stop work and use all available annual leave and then either take annual leave in advance (if the employer agrees) or not be paid;
  • Public holidays, sick leave and bereavement leave during a closedown period are treated the same as during annual holidays.