Christmas/Annual Closedown Periods

Employers are entitled to have a Christmas closedown – provided they customarily have had a closedown period.  Unfortunately, what constitutes “customarily” is somewhat unclear: an employer that has always closed down over Christmas will be fine, but what about, for example, a new (Greenfields) business wanting to close down at some point in its first year of operation?  Factually, such businesses can’t customarily have had a closedown period because they did not exist before.  Whether the Courts will allow a ‘start-up’ to have a closedown is unknown.

Where an employer has customarily had a closedown period, then they can continue that practice provided that:

• They give employees at least 14 days notice of the closedown; and
• Employees are informed that they will be required to take annual holidays during the closedown.

If an employer is going to have a closedown period, best practice is for them to tell employees in writing – a general memo about when the business will close and reopen and that employees will need to take annual holidays is acceptable.

If specific employees do not have sufficient holiday entitlements (which will include those within their first year of employment), then send them a personal letter.  These employees will be paid at 8% of their gross earnings to the date of commencement of the closedown and the employer may discontinue their work during the closedown period.

If an employer has not previously had a closedown period, then, under the Holidays Act 2003, they cannot decide to start the practice now.  However, the Holidays Act allows an employer and employee to agree to take annual holidays, or, if there is no agreement, an employer can direct an employee to take annual leave by giving at least 14 days notice (there may be greater notice or different provisions in an employment agreement).  Through that process, an employer could direct all employees to take their annual leave entitlement – creating a de facto closedown period.  However, an employer could not direct an employee who has no entitlement to annual leave to take leave in advance or leave without pay.