Annual closedown periods

Employers may close their operation or discontinue the work of one or more of their employees at a certain time every year. This is traditionally done over a holiday period, and is called a closedown period.

During a closedown period the employer requires their employees to take all or some of their annual holidays. If the employee is entitled to leave at the start of the closedown period, the Holidays Act 2003 requires that they take paid leave.

If an employee has no annual holiday entitlement for the period of the close down the employer must pay the employee 8% of their gross earnings since they began work or since they last became entitled to annual holidays. In addition an employer and employee can agree that the employee may take annual holidays in advance to cover some or all, of the annual closedown.

Clients not covered by holiday pay during any period of an annual closedown are unemployed for that period (that is, they are no longer in paid employment). They can be considered for Jobseeker Support.

However, due to the short-term duration of the closedown period, many clients in this situation may not meet the job search requirements to receive Jobseeker Support.

In these cases, if the client is suffering hardship they may apply for third tier assistance (a Special Needs Grant or Recoverable Assistance Payment etc) or an Emergency Benefit.

When you consider emergency assistance you need to look at the client's cash assets and the reason why insufficient paid leave is available.

You will need to consider the extent to which the client has caused or contributed to the hardship and the impact on the client and any dependent family.

For example, you may consider paying Emergency Benefit if a person used their annual leave entitlement to cover an extended period of illness.