Annual Closedown: What You Need to Know

As the holiday season approaches, many businesses plan a Christmas or summer shutdown. Make sure you follow these rules to be compliant under the Holidays Act 2003.

What is an annual closedown?

An annual closedown is when an organisation temporarily shuts down operations, often over Christmas and New Year, and requires employees to take leave. To use this option, the closedown must be customary (i.e., it happens every year), and only one closedown period is allowed in each 12-month period. Different parts of a business may have separate closedown periods, and these don’t have to be during the holiday season.

Notice Requirements

Employers must provide at least 14 days’ written notice to employees before the closedown begins. The notice should clearly state the start and end dates of the closedown period.

Leave Entitlements During Closedown

Employees with annual leave entitlement or accrual must use this leave during the closedown. If an employee doesn’t have enough leave accrued, they must take unpaid leave for the remainder of the closedown.

Employees Not Yet Entitled to Annual Leave

For employees who haven’t yet qualified for annual leave, employers must pay 8% of their gross earnings since their employment began (minus any annual holidays taken in advance). The closedown also marks the start of their new annual leave entitlement year.

Public Holidays During Closedown

If a public holiday falls within the closedown period, employees who would normally work on that day are entitled to be paid for the public holiday. These days are not deducted from their annual leave balance.

Compliance and Support

Navigating annual closedowns can be complex, and it’s essential to comply with employment legislation. If you’re unsure about your obligations or have specific questions, reach out for advice to ensure your business remains compliant.