Everyone
Annual closedowns and holidays
If a workplace has an annual closedown, employees may be required to use some of their annual holidays during this time.
What is an annual closedown?
An annual closedown is when a workplace shuts each year, often for a holiday or seasonal break, and employees are required to take time off.
Annual closedowns often happen over Christmas, but some industries have them at the end of a season.
An annual closedown can occur:
- across an entire workplace
- for part of a workplace – for example, where a factory closes each year for maintenance while the office stays open
- for different parts of a workplace at different times.
An employer can only have 1 annual closedown in any 12-month period and must give their employees 14 days’ notice before it starts. They can have different annual closedown periods for different parts of a workplace.
An annual closedown can also happen when the workplace stays open, but the employer temporarily stops work for 1 or more employees. For example, this could happen when a customer service centre stays open between Christmas and New Year but has fewer employees working than usual.
Instead of having an annual closedown, the employer could consider other options like asking employees to take annual holidays, leave without pay or paid special leave.
To find out more about asking 1 or more employees to take annual holidays see:
If an employee is entitled to annual holidays
If at the start of the annual closedown an employee has Paid time away from work for rest and recreation.
If they do not have enough annual holidays to cover the whole annual closedown period, then:
- their employer can choose to also let them take annual holidays in advance
- they may have to take leave without pay (or another form of leave that they agree with their employer).
Example: Employer does not agree to employee taking annual holidays in advance
Mayce has been working for Erin for 2 years. The workplace has an annual closedown of 4 weeks for most of January each year. Mayce gets 4 weeks’ annual holidays each year, but she has already taken 2 of these weeks in advance, so she will only have 2 weeks’ annual holidays entitlement at the time of the annual closedown.
Mayce asks Erin if she can take 2 weeks’ annual holidays in advance at the time of the annual closedown this year so that she will have enough annual holidays to cover the entire annual closedown.
Erin considers Mayce’s request and tells her she can only take 1 week of annual holidays in advance, because if she took 2 weeks in advance this year, the following year Mayce would only have 2 weeks’ annual holidays to cover the next annual closedown.
By agreeing only to 1 week of annual holidays in advance this year, Mayce gets 3 weeks’ total annual holidays (2 weeks’ entitlement and 1 week taken in advance) to cover this closedown and will only have to take 1 week’s unpaid leave to cover the annual closedown. Mayce will still have 3 weeks’ annual holidays left for the following year’s annual closedown.
If an employee is not yet entitled to annual holidays
An employee may not yet be entitled to annual holidays at the start of annual closedown. This could be because they have:
- not worked for their employer for 12 months continuously
- taken unpaid leave of more than a week and this has moved their anniversary date for annual holidays entitlement, or
- at some time, received pay for their annual holidays on a pay-as-you-go basis.
Pay-as-you-go annual holiday payments
If the employee is not entitled to annual holidays, their employer must:
- Pay the employee 8% of their gross earnings as at the annual closedown date.
Employees must be paid an additional 8% of their gross earnings up to the annual closedown date, from:
-
- the start of their employment, if they’ve not worked for their employer continuously for 12 months, or
- their last anniversary date for annual holidays, if they’ve already worked for their employer continuously for at least 12 months.
Any amount already paid as 8% pay-as-you-go, or already paid as annual holidays in advance, must be subtracted.
2. Move the anniversary date for annual holidays entitlement.
The anniversary date for their annual holidays entitlement will be moved to the date the annual closedown starts (or another nearby date that their employer chooses) – meaning they’ll receive their next leave entitlement 12 months from this date.
In this situation, the employee is then not otherwise entitled to:
- any annual holidays for the period of employment up to the start of the annual closedown
- any pay for the period of the closedown.
However, an employee could agree with their employer to take some annual holidays in advance – in addition to the 8% payment.
Example: Employee takes annual holidays in advance during annual closedown
Kenny started working for his employer Tania on 15 September. Two months later, at the beginning of November, Tania gives notice to all her employees that the workplace will have its annual closedown from 24 December until 5 January.
Tania must pay Kenny 8% of his gross earnings from 15 September until 23 December. This amount is similar to 1 week’s pay for Kenny. Kenny is worried about how he will cope financially for the rest of the annual closedown as he was out of work for a while before working for Tania.
Kenny asks Tania if he can have 1 week of annual holidays in advance to tide him over. Tania agrees but reminds Kenny that this will mean the next year he will have only 3 weeks of annual holidays.
Tania also reminds Kenny that she will need to move his anniversary date for the calculation of annual holidays. This means Kenny would not have any annual holidays entitlement available until the following December. Kenny is fine with this, and he and Tania agree to the week’s annual holidays in advance in writing.
Kenny’s anniversary date for annual holidays would normally be moved forward to 24 December (the start of the actual annual closedown period), but Tania chooses to make the date 17 December so that every year her employees will be entitled to annual holidays at the start of the annual closedown period.
This means Kenny will be entitled to 4 weeks’ annual holidays (less the week taken in advance) from 17 December the following year.
Public holidays and leave during annual closedowns
If the following types of leave happen during an annual closedown and it is a day the employee would have worked if there wasn’t an annual closedown, then the employee is entitled to be paid for that day without using annual holidays. This applies to:
- public holidays
- alternative holidays
- sick leave
- bereavement leave
- family violence leave.
For example, if a workplace has an annual closedown from Thursday 25 December 2025 to Sunday 4 January 2026, any employees who would normally work the public holidays that fall during that time are entitled to a paid day off without using annual holidays.
During an annual closedown, the employer and employee may agree to use other types of holidays or leave such as alternative holidays, or any other form of leave (with or without pay) not provided by law.
Other types of closedowns
An employer and employee may agree to other types of closedowns. This could be because the employer wants to implement a closedown that is:
- not an annual closedown, or
- in addition to an annual closedown that has already happened in the last 12 months.
If an employer and employee agree to other types of closedowns, they will also need to agree how these other types of closedowns will be treated, and what annual holidays and/or leave arrangements will apply.
The employer can only require their employees to take annual holidays for these other types of closedowns if:
- the employee has annual holidays they are entitled to take (not annual holidays in advance)
- the employer has been unable to reach agreement with the employee about when they will take these annual holidays
- the employer has given their employee 14 days' notice.
Alternatively, the employer could make other arrangements with their employees for other types of closedowns – for example, they might choose to continue to pay their employees but not require them to work.
The date of the employee’s entitlement to annual holidays is not affected by these other types of closedowns.