It’s the season of giving again – but what if you’re not “given” annual holidays?
What happens if you are a permanent employee hoping for an extended break over the holiday period, but you don’t have enough annual holidays in the proverbial bank? We’ll get to that shortly. First, let’s get some preliminaries out of the way – we’ve got a few public (statutory) holidays just around the corner: Christmas Day, Boxing Day, New Years’ Day, and the 2nd of January 2023.
These are different to your annual holidays, a.k.a., annual leave. Permanent employees should accrue annual leave at a rate of at least four weeks’ leave at each anniversary of employment (i.e., each 12-month period of continuous employment).
With the four public holidays coming up, it’s a good time to remind ourselves what a public holiday generally entails: an “entitlement” to leave, in observation of important days of the year; and if, due to the nature of your employment, you’re required to work on any particular public holiday, then, an alternative holiday (a “day in lieu”) and pay for working the public holiday that reflects at least “time and a half.”
To confuse things slightly, we have looked at the calendar, and found that both Christmas Day and New Years’ Day fall on a Sunday this time around. This means that if Sunday would ordinarily be a day off for you (as may often be the case), your actual “holiday” should then fall on the following Tuesday: i.e., Christmas and New Years’ Day should effectively be “Tuesday-ised” (section 45, Holidays Act 2003). The whole idea is that you should get the full benefit of (at least) four days off over the Christmas-New Year period.
However, following a year of ongoing pandemic-related disruptions and mounting costs of living, you may well be among that worthy cohort of permanent employees planning some more paid time off in the coming weeks. This should be easy if you have banked enough annual holidays. If you haven’t reached your anniversary in your current employment (or, if you’ve used up all your leave accrued at your last anniversary, and are awaiting your next anniversary), you may find yourself lobbying for leave “in advance.” This is because the minimum entitlement is four weeks’ annual holidays “at the end of each completed 12 months of continuous employment” (our emphasis). Perhaps surprisingly, there is no legal requirement for your employer to let you use holidays “in advance” – but of course, they can allow it (section 20, Holidays Act 2003).
We suggest, in practice, requests for leave in advance will often be allowed. Firstly, to maintain morale, and secondly, to avoid liability to an employer if a worker reaches his or her anniversary, becomes entitled to the full complement of four weeks’ leave, then elects to resign, burdening the employer with the additional four weeks’ wage bill when he or she departs.
Basically, it makes a lot of sense to ask for “leave in advance.” If you make the request, and your employer doesn’t provide a satisfactory response, the employer risks breaching the fundamental duty of good faith at the heart of all employment relationships. However, if good faith negotiation fails, an employer’s decision to decline leave in advance doesn’t affect your right to ask for unpaid leave.
Many employers will pre-empt the flood of leave requests (or make their own decision to observe the holiday period) by calling for a close-down period over Christmas-New Year. During this period, each affected employee must take leave, and use annual holidays, if he or she has them (section 32(1) and (2), Holidays Act 2003). If he or she has not yet become entitled to annual holidays, the employer must pay the employee, in respect of the close-down period, eight per cent of his or her gross earnings since he or she commenced employment, or since the last anniversary when he or she became entitled to annual holidays.
For a worker who gets the “eight per cent” payment, any progress made towards his or her anniversary will not count (section 34(3), Holidays Act 2003), and his or her 12 months of continuous employment will effectively “re-start” from the commencement of the close-down period (section 35(1), Holidays Act 2003).
This curiosity may have the effect of streamlining or unifying the date when an employer must give its employees their annual holiday entitlement year-to-year: if for example the customary close-down at your work starts on 23 December, then that date may become the anniversary date for a lot of staff, in terms of when they become entitled to their annual four weeks’ holidays. So, on 23 December next year, for example, a lot more workers will probably have a lot more annual leave to spend over that year’s customary close-down period.
If you have some annual holidays in the bank, but not enough for the whole close-down period, you can agree with your employer to take the balance of the close-down period as leave in advance (section 33(3), Holidays Act 2003). If you have no annual holidays in the bank for the close down period, are therefore paid at eight per cent of your gross earnings, and that does not equal the pay you’d expect to get over the whole close-down period, you can again agree with your employer to take some holidays in advance (section 33(4), Holidays Act 2003).
Close-down periods must be announced at least 14 days ahead of time, so the deadline is fast approaching. As always, if you have any questions, your first port of call should be your employment agreement and your employer. Employment relationships always depend on constructive dialogue. However, we know that confusion often arises; no two cases are the same, and not all can be addressed in one article. If you feel your employer is not complying with its obligations under the Holidays Act 2003, we invite you to reach out to us, or consider engaging with an employment lawyer, advocacy service, or union representative.