Feature article
Legal experts answer your questions on annual holidays
What employers need to know
Getting annual holidays right for each employee is crucial if you want your business to be financially healthy. Small and medium businesses, if you don’t have an HR department keeping a close eye on your employees’ annual holidays uptake, this article is for you.
Penelope Ryder-Lewis and Carolyn Heaton from specialist workplace law firm, Bartlett Law, (www.bartlettlaw.co.nz) answered all our annual leave questions.
What is something employers may not know about annual holidays?
It’s important for employers and employees to realise that unused annual holiday is, in effect, a debt liability for the business. When an employee enters into an employment agreement with the employer, the Holidays Act 2003 requires employers to provide them with information about their holiday entitlements and where they can get more information about these.
If your employee wants more than the standard four weeks annual holidays a year, how should you deal with this?
An employee is entitled to a minimum of four weeks’ annual holidays. Any extra holidays have to be negotiated by the employer and the employee. The Holidays Act 2003 says an employer may allow an employee to take an agreed portion of their annual holidays entitlement in advance. An employer and employee must deal with each other in good faith, according to the Act. This includes being both responsive and communicative.
For instance, if an employee asks for extra leave during a pay review, or at another time for a special reason, the employer must listen and consider their request with an open mind and make an informed decision.
Employers must keep records of their employees’ holidays and leave. It’s advisable for an employer to review an employee’s leave and holidays balance with the employee at least once a year. One way to do this would be as part of an annual review. Another way would be to give employees a note with their leave and holidays balances.
An employee is entitled to a minimum of four weeks’ annual holidays. Any extra holidays have to be negotiated by the employer and the employee. The Holidays Act 2003 says an employer may allow an employee to take an agreed portion of their annual holidays entitlement in advance. An employer and employee must deal with each other in good faith, according to the Act. This includes being both responsive and communicative.
For instance, if an employee asks for extra leave during a pay review, or at another time for a special reason, the employer must listen and consider their request with an open mind and make an informed decision.
Employers must keep records of their employees’ holidays and leave. It’s advisable for an employer to review an employee’s leave and holidays balance with the employee at least once a year. One way to do this would be as part of an annual review. Another way would be to give employees a note with their leave and holidays balances.
If employees are hoarding annual holidays, can you force them to take them?
Annual holidays exist to ensure employees get adequate rest and recreation during the year.
Not all employees take all their annual holidays entitlement every year. Some will save their holidays and some will use it all each year.
The employer should monitor the leave employees are taking to ensure they aren’t going for any significant period without taking their holidays.
An employer can’t take unused annual holidays from an employee. Once the holidays have been accrued by the employee they remain ‘on the books’, so it’s important for an employer to keep an eye on the employee’s holidays balance and to have reasonable discussions with them if they have significant untaken annual holidays.
An employer can’t limit the amount of unused annual holidays an employee carries over from one year to the next because that would mean taking away from the employee their ‘excess’ unused annual holidays. What an employer can do is manage the annual holidays taken by employees (see below) so that employees don’t have substantial amounts of untaken annual holidays to carry over.
Under the Holidays Act, an employer can require an employee to take annual holidays on at least 14 days’ notice. The two parties must first try to agree on when the employee will take their annual holidays.
What are the rules around business closedown periods?
A common Kiwi practice is for businesses to shut down for a period over Christmas and New Year. It’s good practice for employment agreements to state clearly that employees will be required to take their annual holidays at this time.
As the Holidays Act states, the employer must give not less than 14 days’ notice for a closedown. For the closedown period to be lawful, the requirements include that it must be when the employer customarily closes down so it can’t be a random decision to shut the business for a couple of weeks, for example, for financial reasons.
An employer can only have one closedown period per year per employee - but it doesn’t have to be at Christmas and it doesn’t have to be the same for every department.
And, according to the Holidays Act, there is no limit to the length of time of the closedown period.
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