As the end of the year approaches, many businesses across New Zealand start planning for their annual Christmas closedown. Whether you’re shutting your doors completely or running a smaller team through the holiday period, it’s important to make sure you handle your employees’ leave correctly, especially when it comes to giving notice for annual leave.
What the law says
Under the Holidays Act 2003, employers can require employees to take annual leave during a customary closedown (for example, over Christmas and New Year), but there are some key rules to follow.
You must give at least 14 days’ notice before the closedown begins.
The closedown period must be a genuine business closure where work ceases — not just a slowdown.
Employees can be required to use their annual leave entitlements for this period.
If an employee hasn’t yet qualified for annual leave, they must be paid 8% of their gross earnings to date, and their leave anniversary will reset to the closedown date.
Paying leave in advance
You may choose to pay annual leave in advance for employees who haven’t yet accrued enough to cover the full closedown period. While this can be a goodwill gesture at this time of year, it’s important to be aware of the risk if the employee leaves before accruing the leave they’ve been paid for. In that case, the business may need to recover the overpayment, which can be difficult.
That said, the Christmas period can be financially stressful for some employees, and refusing to allow leave in advance can create hardship or disengagement. It’s worth balancing the compliance risk with the wellbeing of your team and the value of maintaining a positive, supportive workplace culture.
Why giving notice matters
Failing to provide the correct notice can lead to confusion, complaints, or even non-compliance with employment law. Notice ensures your team has time to plan and understand how the closedown will affect their pay and leave balances.
Proper communication also helps maintain goodwill and trust — after all, the holidays should be a time to rest and recharge, not a source of stress or uncertainty.
Make it easy: get our free letter template
To help make things simpler, proHR has created a free Christmas Closedown Letter Template that you can adapt for your business. It outlines the required notice, key dates, and what employees need to know about taking annual leave.
It’s quick, compliant, and ensures your communication ticks all the right boxes under the Holidays Act.
Contact us today to request your free letter template and ensure your Christmas closedown is handled smoothly and legally.
