K3 Insights

The holiday season is a critical time for businesses, with staff absences and leave requests often peaking during this period. As an employer, it’s essential to ensure that you’re meeting your legal obligations and handling leave in a fair and consistent manner. Here’s a reminder of key legal requirements under New Zealand employment law, along with some practical tips for managing leave during the Christmas period.

Legal Obligations for Employers

1. Adhering to the Holidays Act 2003

Under the Holidays Act 2003, employees are entitled to four weeks of paid annual leave after 12 months of continuous service. This entitlement applies regardless of the business’s operational needs during the holiday period. It's important to remember that public holidays such as Christmas Day, Boxing Day, New Year’s Day and the 2^nd of January all have specific requirements, including:

• Time-and-a-half pay for working on a public holiday.
• An alternative holiday (a paid day off) for employees who work on a public holiday, provided the day would have otherwise been a workday for them.

Public Holiday Transfers: Employees and employers can agree to transfer a public holiday to another day (if the employee is not required to work). This must be agreed to in writing and must comply with Section 44A of the Holidays Act.

Leave Requests and Denials: Employers must make a reasonable effort to accommodate leave requests and cannot deny leave requests unreasonably. However, employers can manage leave requests by balancing the needs of the business with the rights of employees.

The principle of good faith in employment relations, as outlined in the Employment Relations Act 2000, means employers must act in a way that’s fair and transparent.

2. Closedown Periods and Employment Agreements

A closedown period refers to when a business temporarily closes and employees are required to take annual leave. During the Christmas period, many businesses close for a few days, and employees may be asked to use their annual leave during that time.

Key requirements:

• Employers must give at least 14 days' written notice before a closedown period starts.
• This closedown period should be clearly outlined in the employment agreement. It’s vital that employees are informed of these conditions when they start their employment, so they can plan accordingly.

If the closedown period is not addressed in the employment agreement, you cannot force employees to take leave during this time unless they agree to it. Additionally, if an employee has no leave left, you cannot require them to take unpaid leave unless this is agreed upon beforehand.

3. Accurate Record Keeping

Employers are legally required to maintain accurate records of employee leave entitlements and usage. This includes:

• Leave taken and leave balances.
• Payslips that clearly show annual leave taken, public holiday pay, and any alternative holidays.

Not only does this ensure compliance with the Wages Protection Act 1983 and the Holidays Act 2003, but it also prevents disputes down the line.

Best Practices for Managing Christmas Leave

1. Plan Early and Communicate Clearly

The earlier you communicate about the Christmas period, the better. Encourage employees to submit leave requests well in advance, so you can better anticipate staffing needs. Communicate clearly about any company-wide policies regarding leave during the holidays.

2. Use Rotational or Fair Shift Systems

For businesses that cannot close over the holiday period, such as retail or hospitality, implementing a rotational shift system is a great way to ensure everyone gets time off. This allows all employees an equal chance to enjoy the holidays while maintaining sufficient coverage for your operations.

3. Offer Flexible Options

Where possible, consider offering flexible leave options. For example, allow employees to work part-time, split their leave into shorter periods, or even work remotely, if applicable. This can make it easier for employees to balance family commitments with work obligations.

4. Review Payroll Systems

Ensure your payroll system correctly calculates holiday pay, especially for employees who work on public holidays. Many businesses get caught out by not properly compensating employees with time-and-a-half for public holiday work, or failing to provide alternative holidays when required.

5. Be Fair and Transparent in Your Decision-Making

Disputes over holiday leave can arise if employees feel they’ve been unfairly treated. Ensure that your decisions are made fairly, based on business needs, and that employees understand the reasoning behind any decisions. Document your communication with employees and be consistent in how you apply policies.

Why Compliance Matters ?

Properly managing leave during the holiday season is not just a legal obligation but also a critical component of fostering a positive, compliant workplace. Non-compliance with the Holidays Act 2003 can lead to disputes, fines, and potentially costly compensation claims. By implementing best practices and keeping clear records, you reduce the risk of issues and ensure your team remains satisfied and motivated.

If you’d like further assistance with understanding and complying with the Holidays Act or need help drafting closedown clauses in employment agreements, K3 Consulting is here to help. Contact us today for expert advice tailored to your business.