Some employers regularly close down for a holiday period or seasonal break and require employees to take annual holidays or unpaid time off. This is called an ‘annual closedown,' and it can occur:
- Across an entire workplace; Or
- For part of an organisation (e.g. where a factory closes for maintenance while the office, despatch, and sales departments stay open).
This often happens at Christmas time, but some seasonal industries do this at the end of a particular season. This simply means employers can shut down different areas of the company at varying times.
The employer may have a customary close-down once a year and require employees to take annual holidays during this period, as long as they give employees 14 days’ notice.
The employer may also nominate a different date to signify the start of the close-down, provided that this date is reasonably near the actual start of the close-down period. This is often referred to as a 'company common anniversary date.'
As per Section 35(2) of the Holidays Act 2003, an employer may nominate a common anniversary date for annual holidays. However, this date should be reasonably proximate to the actual beginning of a close-down period.
To set a common anniversary date for annual holidays, you can:
- Click the Business menu.
- Click the Payroll Settings submenu.
- Under Pay Run Settings, click Leave Categories.
- Click the Company wide common annual holidays entitlement date checkbox.
- Enter the date you have nominated as your common anniversary date.
- Click the Save button.
- Click Yes or No to "Would you like to apply the Leave year settings to all employees?"
Important
Note that this setting will only apply to annual holidays. All other leave entitlement dates will be based on the employee’s individual settings.
To apply this setting to an employee, you can:
- Click the Employee menu.
- Click the List submenu.
- Click the name of the employee you need.
- Under Pay Run Settings, click Leave Allowances.
- Click the Use company default entitlement date checkbox.
Helpful Hint
This will automatically apply the date you entered on the Leave Categories page.
- Click the Save button.
The leave entitlement will accrue when the common anniversary falls within a pay period.
- Employees with more than 12 months service - They will receive the full 4-week entitlement.
- Employees with less than 12 months service - Their entitlement will be pro-rated in the first year. Then, they will receive the full 4-week entitlement each year thereafter.
The platform will count the number of days from the employee's start date to the common anniversary date. It will then calculate the pro-rated entitlement based on this number of days.
The calculation will look like the following example, where the employee started on 5th May 2024 and the common anniversary is set to 15th December 2024:
- From 05/05/2024 to 15/12/2024, there are 225 days. If the employee was accruing leave in weeks, the calculation would be 4 weeks divided by 365 days in the year multiplied by 225 days.
- 4/365*225 = 2.4657 weeks accrued