With Christmas approaching, employers are again having to navigate the complexities of the Holidays Act. New legislation, providing clear methods for employers to use to accurately calculate and pay leave entitlements is underway, but not with us yet. So here are the answers to some frequently asked questions at this time of year.
Can I require my employees to take annual leave during the closedown?
Employers can have one closedown per year (more with the employee’s agreement). If an employee is entitled to annual holidays at the beginning of the closedown period, an employer can require the employee to take annual leave during the closedown.
What do I pay an employee over a closedown?
If an employee has been employed for less than 12 months, they must be paid 8% of their total gross earnings at the start of the closedown, less any amount paid for leave taken in advance. The employee’s service is then treated as starting, for annual leave purposes, on the date the closedown begins, so they are not entitled to any leave for a further 12 months.
If an employee does not have enough annual leave, he/she can, if the employer agrees, take leave in advance. Otherwise, he/she will be on leave without pay. There is no obligation on an employer to grant leave in advance, and the employer may consider it a risk to do so if there is a chance the employee will not come back to work after the closedown period. In that case, the employer will have overpaid the employee and it may not be worth the cost of pursuing the employee for the overpayment.
If a public holiday falls on a day that the employee would otherwise work, and they are required to work, then they are entitled to be paid time and a half based on their relevant daily pay or the average daily pay for the hours that they work, and also receive an alternative day as a holiday.
If the public holiday falls on a day that the employee does not normally work, and they agree to work, then they are entitled to be paid time and a half based on their relevant daily pay or average daily pay, but they do not receive an alternative paid holiday.
If the public holiday is a day that the employee would otherwise work, but does not work on that day, then they are to be paid either their relevant daily or average daily pay depending on which calculation is used by the employer.
With respect to casual employees, the employer will need to consider the casual employee’s pattern of work. If a casual employee’s pattern of work identifies that they regularly work Mondays (for example, the employee has worked the past 3 out of 5 Mondays), then they will be paid for Christmas Day and New Year’s Day this year as those days fall on Mondays.
What happens if the employee is sick or suffers a bereavement during the closedown?
If the day on which the employee is sick, or suffers a bereavement, is a day that the employee would otherwise have been working (but for the annual closedown) then they are entitled to be paid sick or bereavement leave rather than using up their annual leave. This is not the case where an employee is on annual leave outside a closedown period and becomes sick. In that case, there is no mandatory obligation on the employer to allow the employee sick leave.