Top Tips for the Christmas Period

With the Christmas period fast approaching (less than three weeks, but who is counting), we have set out some helpful tips and reminders below, to see your business run smoothly through the silly season.

1. What should I pay my employee on public holidays over the Christmas period?  

There are four public holidays over this period, Christmas Day (25 December), Boxing Day (26 December), New Year’s Day (1 January) and 2 January.  The table below sets out employees’ entitlements pursuant to the Holidays Act 2003 for public holidays. 

Working arrangement

Payment

The public holiday falls on:

  • an otherwise working day for an employee; and
  • the employee works on that day

The employee will:

  • be paid the greater of:
    • at least time and a half, based on the employee’s relevant daily pay (“RDP”) or average daily pay (“ADP”), for the hours actually worked; or
    • the employee’s RDP that relates to the time actually worked on the day; and
  • receive a day in lieu (alternative holiday). 

A public holiday falls on:

  • a day that is not an otherwise working day for an employee; and
  • the employee works on that day

The employee will be paid the greater of:

  • at least time and a half, based on the employee’s RDP or ADP, for the hours actually worked; or
  • the employee’s RDP that relates to the time actually worked on the day.

A public holiday falls on:

  • a day that is an otherwise working day for an employee; and
  • the employee does not work on that day  

The employee will be paid not less than the employee’s RDP or ADP for that day. 

Where it is not clear whether a day would be an “otherwise working day” for the employee, the employer and the employee must take account of the following factors, with a view to reaching agreement:

  • the employee’s employment agreement;
  • the employee’s work patterns;
  • whether the employee works for the employer only when work is available;
  • the employer’s rosters or other similar systems;
  • the reasonable expectations of the employer and the employee that the employee would work on the day concerned; and
  • whether, but for the day being a public holiday, the employee would have worked on the day concerned.

2. What happens if the public holidays fall on a weekend?

This Christmas period, Boxing Day (26 December) and 2 January 2021 will fall on a Saturday. 

If Saturday is not the employee’s ordinary working day, then the public holidays on Boxing Day and 2 January 2021 will transfer to Monday 28 December 2020 and 4 January 2021 respectively (being the next working day).  This is called “Mondayisation.”

If Saturday is the employee’s ordinary working day, then Saturday will be treated as the public holiday for that employee.

The employee should be paid as above for the public holiday.

3. Can I require my employees to work overtime in the lead up to Christmas/over the busy summer period?

An employee can decline to be available to work, or to work above and beyond their agreed hours of work, if their employment agreement does not include a valid availability provision. 

For an availability provision to be valid and enforceable, the employer must:

  • have genuine reasons based on reasonable grounds for including the availability provision.  For example, operational flexibility and customer demands;
  • specify the employee’s hours of work, including some guaranteed hours, in their employment agreement; and
  • compensate the employee for being available outside their guaranteed hours and specify that compensation in the employment agreement.  For salaried employees, their salary could include reasonable compensation for making themselves available (provided their hourly rate for each hour worked does not fall below the minimum wage).  Whereas, for waged employees, a separate amount will need to be specified.

If there is no valid availability provision in the employee’s employment agreement, an employer can still request (as opposed to require) an employee to work additional hours.  The employee can accept or decline this request.

Employers may also wish to employ casual or fixed term employees to support the additional workload over the busy Christmas season.  There are some fishhooks with fixed term and casual employment relationships.  It is essential that fixed term employment agreements are compliant with section 66 of the Employment Relations Act 2000 and that the nature of the relationship is truly casual in the case of a casual employee.  Please see our Vlog on casual employees here.

4. Can my business cancel an employee’s approved annual leave?  

Employers are entitled to decline leave requests for operational reasons (such as staffing, customer demand and so on).  Whereas an employer cannot unilaterally cancel an employee’s approved annual leave.  It can only be cancelled by agreement.

Should you need to cancel an employee’s approved annual leave for whatever reason (influx of work or lack of staff), you should have a conversation with the employee to explore possible alternative options, in order to reach an agreement as to when annual leave is taken.  

5. My business is having a closedown over Christmas. What are my obligations?  

Closedowns can only occur once a year, and an employer must give its employees at least 14 days’ notice of the closedown.  Notice should be either in an email or a letter to the affected employees. 

Annual Leave Entitlement

Obligations

An employee who is entitled to annual leave at the commencement of the closedown

The employee must (if required) take annual leave during the closedown.

Annual leave for entitled employees will be calculated in the usual way.  However, if the employee does not have enough annual leave to cover the whole period of the closedown, the employer and the employee may agree that the employee take some of the closedown as annual leave in advance calculated at the greater of:

  • ordinary weekly pay at the beginning of the closedown; or
  • average weekly earnings for the 12 months immediately before the end of the last pay period before the annual holiday or (in the case of an employee who has worked for the employer for less than 12 months) the period of employment before the end of the last pay period before the close down.

An employee who is not yet entitled to annual leave at the commencement of the closedown

The employee must (if required) discontinue the employee’s work during the closedown.

The employee would be entitled to 8% of the employee’s gross earnings since the commencement of their employment or since they last became entitled to annual holidays, less any annual holidays taken in advance or paid on a pay as you go basis. 

The employee’s anniversary date will then be treated as commencing on the date on which the closedown began, rather than the date they commenced employment.  The employer can nominate the date which must be treated as the date on which the closedown begins, provided it is reasonably proximate to the actual beginning of the closedown. 

Payments to employees during the Christmas period (due to public holidays, annual leave and closedowns) can be complex.  It is essential employees are correctly remunerated during any period of leave, otherwise employers could face costly wage arrears and penalties claims.  

If you require any specific advice, please do not hesitate to contact us on 0800 339 002.

Author: Rachel Nightingale, Barrister

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