Managing mandatory closedowns in EXO Payroll (New Zealand)
Many businesses have a mandatory closedown over the Christmas period. When you have a mandatory closedown in place for all or part of your business it is important to understand your leave obligations under the Holidays Act 2003.
For full details of managing payments, adjusting anniversary dates and overall management please see our whitepaper: Managing Mandatory Closedowns - Whitepaper
Rules around closedowns:
- Employers can implement an annual closedown for the whole business or part of a business
- Employers must give employees at least 14 days notice of a closedown
- A Mandatory closedown is only in place when an employee doesn't have a choice whether or not they can work - time off is enforced
- A closedown is not a break in continuous employment for the employee
- An employer may nominate a closedown date. Note that if you have a company anniversary date turned on in Exo Payroll we recommend that you turn this off.
This year MBIE have clarified their interpretation of section 34 of the Holidays Act - if a closedown happens prior to an employee becoming entitled to 4 weeks annual leave the following rules apply:
- The employer MUST pay the employee 8% of gross earnings to date, less any leave taken in advance
- The employee's anniversary date must be rolled one year ahead from the date of payment
- The employer & employee can agree that the employee can take leave in advance from the next years entitlement IF the 8% is not enough to cover the closedown period.
An employee who hasn't reached entitlement to 4 weeks may be:
- A new employee with less than 12 months service
- An employee who has had extended unpaid leave (more than 1 week)
- An employee who has been on PAYG holiday pay and moved to a permanent 4 week entitlement less than 12 months ago.
Once again if you have any of these criteria and want to find out more about managing closedowns in your business please refer to our whitepaper: Managing Mandatory Closedowns - Whitepaper
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You can also find more help resources on the MYOB Exo Employer Services Education Centre for Australia or New Zealand.