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Pre-Christmas considerations for Employers

November 26, 2015

This article refers to some basic matters that are relevant to employers in view of the rapid approach of Christmas.

Annual leave - employees aren’t generally entitled to any annual leave until they have been continuously employed for 12 months and thereafter, until the expiry of each 12 month period. The situation may be a bit more complicated where an employer has allowed annual leave in advance. The current statutory entitlement is 4 weeks. An employee can take at least 2 weeks of their annual leave in a continuous period.

Calculation of holiday pay - for employees who are entitled to annual leave and who take it, for each week, their pay is the higher of the employee’s ordinary weekly pay (as defined in the Holidays Act) at the time that the leave is taken or their average weekly earnings (also as defined in the Act) for the 12 months before the end of the last pay period before they take the holiday. (Payroll/accounts staff should be knowledgeable about this and information can be obtained from the Labour Dept.) Unless the employment agreement provides otherwise, the holiday pay must be paid in one lump sum at the outset of the holiday.

Close Down - if an employer has regular annual close downs over Christmas, as defined in the legislation, they must give affected employees 14 days’ notice that they aren’t required to work during the close down period. Employees who aren’t yet entitled to annual leave but who aren’t required to work during the close down period must be paid holiday pay, calculated as required by the legislation (basically 8% of gross earnings to date, as defined in the Act). In relation to those employees, their 12 months of continuous employment (for the purposes of calculating annual leave entitlement) is deemed to have commenced on the date that the close down begins.

Statutory holidays over Christmas – where they fall on week days, employees who would normally work on them get the day off on pay. Where the holidays fall on a weekend, and where an employee would normally work on the weekend day in question, that is when they take their paid holiday for the day. But for employees who don’t work on the weekend, the holidays are carried across to the next week day and if the employee would normally work on that week day, they take the holiday then on pay. This Christmas, Boxing Day and 2nd January fall on Saturdays, which means that section 45 of the Holidays Act applies. Under section 45, if a public holiday over Christmas and New Year falls on a Saturday and the day would otherwise be a working day for an employee, the public holiday must be treated as falling on that day. If a public holiday falls on a Saturday and the day wouldn’t otherwise be a working day for the employee, then the public holiday must be treated as falling on the following Monday (this Christmas, 28 December and 4 January respectively).

Expiry of Annual Leave - annual leave doesn’t expire until it’s taken. Accordingly, annual leave accrues from year to year.

Records - Employers must keep proper records of annual leave.

Please contact me if I can help you with any legal matters relating to your business (whether or not related to employment matters).


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