By Vaughan Granier

It’s hard not to get swept up in the excitement of the end of the year – despite the ongoing impact of the COVID-19 pandemic. But if you plan to close your office over the Christmas and New Year break, it’s important not to leave your preparation to the last minute. By ticking all the right HR boxes off before you sign out for the holiday season, you can streamline administration and decision making in your business over your annual close-down. And you’ll be doing your payroll team a favour by making their job easier!

Let’s have a look at some of the decisions and requirements you’ll need to consider.

1. Provide at least 14-days’ notice to workers for an annual close-down

As an employer, you have the right to direct your employees to take leave over the Christmas and New Year holidays. However, to make this request you must give at least 14 days of clear written notice of your end-of-year closure to your workers. This year, the last possible day for the minimum 14-day notice will occur on Friday 10 December 2021.

It’s a great idea to plan for this and communicate your office close-down period well in advance. You’ll need written proof of all leave requests as well, so make sure your employees apply for their holiday leave following your usual process.

I always recommend starting conversations in early November so that there’s plenty of time for employees to submit their leave requests and management to make decisions.

2. Prepare to balance operational requirements with leave requests

Where a skeleton crew is required or where some of your employees usually work through the holiday period anyway, you may have to balance work requirements with leave requests. For example, an employee you’ve rostered to work may request leave claiming: “I’ve paid for my holiday already”, but, you might need them to work because of necessities such as maintenance schedules. You can typically manage these leave requests based on your operational needs.

Again, don’t wait until the last minute to talk about holiday leave during your office close-down; get in early with a general note to all employees informing them that you’re starting to plan for the end of the year.

An employee shouldn’t be allowed to jump the queue if they’ve been slack in applying for leave over another conscientious employee who has had leave approved already. But with this in mind, your decision may still depend on individual circumstances. Take the time to review each request and see what you can do to accommodate appropriate leave requests. You may find there are extenuating circumstances, and other employees may be flexible.

You can refuse a leave request on reasonable grounds, such as for operational reasons, and require an employee to work. Suppose you do this, and your employee then ignores your decision and fails to turn up (it does happen). In this case, you can manage the situation as potential misconduct for deliberate unauthorised absence and investigate it thoroughly. Depending on the damage suffered by the business, you may need to issue a warning or even begin a termination process for serious misconduct.

3. Manage employees with an insufficient leave balance

An employee is only entitled to take leave if they’ve worked a full 12-months for your business. Before that, they might be accruing leave, but they aren’t yet entitled to it – unless your company policy says they can access their accrued leave early.

If you have an employee who has insufficient leave to cover all or some of their time off over the close-down period, here are three common ways to manage this:

  1. You can require an employee to take unpaid holidays for any period of leave where they don’t have a paid balance available to them.
  2. An employee can have their annual leave balance paid out and move their start date for accruing annual leave each year from their first day of work to the date they started taking leave. Say an employee starts on 1 December and works for three weeks until the company starts the close-down period on 21 December. As a new employee, they’ve no entitlement to any paid leave, and only 1.09 days paid leave accrued (20/365 x 4 weeks leave). You could pay this employee out for their 1.09 days leave and move their new annual leave anniversary date from 1 December (their actual start date) to 21 December (their new leave anniversary date). Each year the employee would now accrue annual leave from 21 December.
  3. The company can pay the employee anyway. Using the above example in point two, the employee would then have a negative leave balance and receive three full days paid but start 2022 with a negative balance of -1.91 days leave. They will owe the company this leave until they’ve accrued enough to cancel it out.

4. Understanding annual leave and sick leave over the holiday period 

Annual leave days cannot include public holidays.

Over this festive season, an employee can be on paid absence from the workplace from the evening of 24 December 2021 to the morning of 5 January 2022 (usually seven working days) and need annual leave for these three days only: 29, 30, 31 December. The remaining four days will be paid as public holidays: 27 and 28 December (Mondayised and Tuesdayised from 25 and 26 December) and 3 and 4 January (Mondayised and Tuesdayised from 1 and 2 January).

If your employee is ill when on annual leave and they have sick leave available, they can convert their annual leave days into sick leave. If you make this change, make sure you check whether it will result in a different pay rate. This difference may occur because of the variances in how annual leave and sick leave pay is calculated, which are:

  • annual leave pay is calculated as the greater of the average weekly pay or the ordinary weekly pay for that employee; and
  • sick leave is paid at an amount that is equivalent to the employee’s relevant daily pay or average daily pay.

5. Diarise the Christmas and New Year public holidays 2021/22

A friendly reminder that there are four public holidays at every end of year period:

  • Christmas Day – on a Saturday in 2021 (Mondayised);
  • Boxing Day – on a Sunday (Tuesdayised);
  • New Year’s Day – on a Saturday (Mondayised); and
  • Day after New Year’s Day – on a Sunday (Tuesdayised).

6. Help payroll out

 If the end of year payroll is complex and changing owing to variable factors, like overtime and call outs, your payroll person or team might have to work through or interrupt their holidays to ensure payroll is processed correctly. You might consider agreeing with all employees that payroll will be standardised and prepared in advance and that changes – such as extra overtime, callouts, and annual to sick leave conversions – will be washed up in the first payroll back after New Year. If everyone agrees, this can give your hard-working payroll person a decent break!

If you’re unsure about how to manage public holiday leave and pay, here’s a link to a cheat sheet on public holidays for employersit’s a good resource to keep bookmarked for easy reference whenever a public holiday is coming up.

For more support and advice on managing your annual end-of-year shutdown, clients of HR Assured can contact the 24/7 Telephone Advisory Service at any time.

If your business is not an HR Assured client, we’d like to offer you a no-obligation, complimentary 30-minute consultation call. Employers can speak to our friendly workplace relations consultants and seek advice about this new legislation or an existing workplace issue. You can arrange your complimentary consultation here.

Vaughan Granier is the National Workplace Relations Manager for HR Assured NZ. He has over 24 years of experience in international human resources, health and safety, and workplace relations management. With over 10 years working in New Zealand and Australian companies, he provides in-depth support to leadership teams across HR, Health and Safety, and employee management.