Christmas annual leave – where do employers stand?

HRD investigates the potential pitfalls

Christmas annual leave – where do employers stand?

When it comes to annual leave over this year’s Christmas break, some employers might find themselves in legal hot water.

Many businesses encouraged or forced their staff to use part or all of their annual leave entitlements to minimise the hit on profit during New Zealand’s stage four lockdown.

But as workers look towards the Christmas break, they may have grounds to argue their leave should be reinstated if that decision was not taken lawfully.

HRD spoke to John Farrow, partner at law firm Anderson Lloyd to understand the potential pitfall.

“What is likely to happen is that people who have been pressured into taking leave during the lockdown get to Christmas and don’t have any leave left,” he said.

“They might decide that is unfair and try to challenge the way in which leave was granted and the reasons for taking that leave.

“The question is whether or not it was done lawfully. If an employer simply said you must take your leave, then that’s going to be unlawful.”

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Under the Holidays Act, employers must discuss leave agreements with their employees in good faith.

Only after that genuine discussion can an employer require an employee takes his or her leave and then, they must give a 14-day notice.

A 14-day notice period is also required before an annual shutdown – such as Christmas – and it is not enough for employers to claim they do not have enough money to pay their staff, especially if they acted unlawfully to encourage employees to use up their annual leave.

“There will be some employers who might have given the notice but didn’t understand that first they needed to try to reach an agreement in good faith with their employees,” Farrow said.

If the employer failed in their duty under the Holidays Act, the leave could be reinstated – but employees would need to be quick about beginning those discussions.

They would need to raise those concerns with their employee and try to negotiate a solution. If that failed, the issue could go to mediation.

So, what can an employer do if they failed to take the correct route?

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Most likely, an employer would allow their employee to take leave from next year’s entitlements.

But Farrow said allowing employees to dip into their future annual leave brings its own concerns.

“Employers need to think carefully about health and safety requirements,” Farrow said.

“If you allow someone to use up their leave and allow a long period of work without leave available, that can be a cause of added stress.”

An employer has a duty to manage their employees’ annual leave over the year and ensure they are using it in a way that encourages rest and relaxation away from the workplace.

Top five annual leave tips for employers and employees in New Zealand

  • A 14-day notice must be given in writing before an annual closedown. If an employee doesn’t have sufficient leave, they can take leave without pay or the employer and employee can agree to use annual leave in advance
  • Employers can only require an employee to work on a public holiday if it falls on a day the employee would otherwise have worked and if the requirement is noted in their employment agreement
  • All employees should be paid time and a half for working on a public holiday. If it falls on a day they would normally work, the employee is also entitled to a paid day off at another time.
  • Employees can ask to cash up to one week of their four week’s annual holidays in any entitlement year, providing the employer agrees. If they decline, it must be done in writing but does not require a reason
  • Employers can only cancel approved annual holiday after negotiation with the employee and they must agree to it. An employer must discuss the issue in good faith and ensure there would be no consequence to the employee refusing to cancel their approved leave

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