Closedowns during the year
The Holidays Act allows businesses to close down once per year, allowing your staff to take annual holidays, refresh and recharge; in most cases this is used for the Christmas and New Year break.
However, there are certain rules that apply depending on your employees’ work situation:
- Employees who are entitled to annual holidays at the time of the closedown must be provided with 14 days‘ notice in writing in order to cease work and be required to use annual holidays to cover the closedown.
- If these employees do not have enough annual holidays to cover the closedown, you can mutually agree to another solution, such as allowing them to take leave without pay or use leave in advance.
Feel free to use our template on the right to notify your team of your company’s annual closedown. It’s free for members of Retail NZ!
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Template: Notice of Closedown$100.00
What about my employees who aren’t yet entitled to annual leave?
Employees who have yet to establish 12 months of continuous employment can be paid 8% of their gross earnings since their start date, less any annual holidays taken in advance. In addition to this, their leave entitlement anniversary date will realign to the start of the closedown. This means that this date will be their new anniversary date for future annual holiday entitlement.
Alternatively, you and your employees can agree to take leave in advance. Be sure to discuss with your employee how this may affect their future leave entitlements, and what happens if they terminate employment with a negative leave balance.
Public holidays that fall during a closedown period
When a public holiday falls during a closedown period, your employees are still entitled to be paid for these public holidays if they would have otherwise worked on the day.
For example, if your closedown is a total of 10 working days, but 4 of these are public holidays (Christmas, Boxing Day, New Year’s Day and 2 January), then only 6 days of annual holidays will be deducted from the employee’s balance, and they will be paid their ordinary pay for the public holidays not worked.
Other things to keep in mind:
- The Holidays Act provides for one closedown per year. There is nothing stopping your business from having more than one, however the special provisions will not apply. In cases like these, you will need to negotiate with your staff so that continuity of income is ensured.
- You must provide no less than 14 days notice. If you fail to provide the correct amount of notice prior to a closedown, the closedown can be considered not in effect! So be sure to always provide this period of notice to your staff.
- There will be some employees who have commenced work with you very close to the closedown, be sure to genuinely consider granting some leave in advance for these types of employees — you want to make sure your staff are not significantly disadvantaged during the closedown.
As always, if you have any specific issues in this area or any other, our Advice Service is here to help and can be contacted by email or phone 0800 472 472 (1800 128 086 from Australia).
Not a Retail NZ member? With the festive season around the corner, it’s the perfect time to join Retail NZ and make the most of all the benefits, including access to our Advice Service. You’ll be able to get the advice you need to help manage your store, team and public holiday pay during the busiest time of the year — meaning you have more time supporting your business over the coming months. Click here to learn more about joining our supportive Retail NZ community.
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Updated September 2025
