When Christmas comes early: negotiating holiday pay before the silly season.

Christmas — it’s both far off and just around the corner, depending on how you look at things. The traditional holiday season sees most offices shut their doors for three weeks as the calendar changes, starting the new year afresh. But with the ever-increasing cost of holiday season flights and the steady increase in internationals entering New Zealand, many employees are now opting to take their holidays at alternative times.

So, how do you negotiate holiday pay with alternative breaks? In this blog, we’ll cover everything you need to know about handling employee leave allocation and holiday expectations. 

Public Holiday Entitlements

In New Zealand and Australia, there are four recognised public statutory holidays over the Christmas break — Christmas Day, Boxing Day, New Year’s Day and the day after. Over 2023/2024, all four holidays will fall on a Monday or Tuesday, but when it doesn’t, the holiday potentially shifts to the following Monday (or Tuesday). 

These statutory public holidays work differently from regular holiday leave. They must be paid based on work that would have occurred during that time, even if the employee has no allocated holiday leave left in the bank.

Unless contractually stated otherwise, or if the employee’s place of work operates typically on public holidays, these days off will be observed. Employers must also give employees fourteen days' notice for a closedown period. 

Variable and shift work.

The following is easy enough under a full-time contract, but what about variable hours? Under the roster system, the holiday pay is applied if an employee would usually work that day. If in dispute, an employee can review the average pattern over the previous four weeks to determine what days their work normally falls on. 

Asking to work on public holidays.

Legally, an employer may request an employee to work on any of the four statutory holidays if the request is reasonable (e.g. the employee’s presence forms an essential service or the employer cannot halt production over the holiday break). Working during a statutory public holiday entitles the employee to time and a half, potentially, plus a day in lieu.

This agreement can work the other way if the employee wishes to approach the employer about working during a statutory holiday. However, the employer may refuse this request. Public holidays can be substituted if an agreement is reached between employer and employee, depending on the employee’s particular award (in Australia) or collective agreement (in New Zealand). Again, this depends on the exact nature of the deal, which should cover the following;

• Whether extra pay is required
• Whether a public holiday can be substituted
• The minimum shift length 
• Whether an extra day off or annual leave is to be taken

Cancelling annual leave.

An employer can’t cancel an employee’s annual leave without employee approval. This is to protect their leave plan. If leave cancellation is required, the employer must approach the subject with the employee in writing. 

Need more leave?

Special provisions are available if an employee hasn’t worked for twelve months or is not entitled to standard annual leave entitlement. For one, they must get paid 8% of their gross earnings at the closedown date. Annual leave can also be agreed on in advance.

Leave payout.

Employees who don’t wish to take the total annual leave may request part of their leave as a payout during the year. Employees can request up to five days of annual leave payment without taking the days off. 

However, an employer may say no if they require the employee to take the time off (e.g. if the employer expects to close down during Christmas).

Closedown period.

Employers can enforce one closedown period per twelve months and require their employees to take annual leave at a particular time of year. However, the specified date can be changed if the employee agrees with the employer about their time off.

Where enough annual leave isn’t accrued, an employer may request an employee to take a leave period without pay. This can happen if an employee requests annual leave before the Christmas break and the employer has an enforced closedown period longer than the employee’s accrued leave. An employer may also ask an employee to take annual leave during the closedown period.

Any work inside the closedown period, with additional annual leave, must be met by special arrangement. Legally, all regular employees are entitled to four weeks of annual leave in New Zealand and Australia. An employer may request you legally to take your break anywhere within the twelve months.

However, if requested, an employee must take annual leave within the closedown period. 

So what are the choices?

You have a few options if your employees are approaching you about alternative leave arrangements. 

• The first is offering annual leave payment with no pay leave during the closedown break. 
• The second is to negotiate another shutdown period for the company within twelve months if another of the companies will be working. 
• The third option is to revisit the employee-employer contract to negotiate a new period of annual leave during the year. 

However, as an employer, you have the right to refuse this request if there is no benefit to your company by making such an allowance.

Conclusion.

Christmas break may seem a given for those working regular, full-time hours. However, for payroll, negotiating the different leave arrangements can be challenging.

Finding exactly what leave someone has available and how to apply it shouldn’t take up all your holidays. For more information on how to better track hours and use leave entitlements, get in touch with the team at TimeFiler.

Sites sourced:

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• Christmas Closedown Q&A on Edwards Law. Date Published: 13^th December, 2021. Site Link: https://edwardslaw.co.nz/christmas-closedown-qa/. 
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