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Employers will often choose to use a common anniversary date when the business has a regular annual closedown, such as a Christmas shutdown. This choice is often made to make the management of their leave easier.
We recommend that when a common anniversary is being considered, seek advice from the Department of Labour to gain a full understanding of the rules surrounding the use of common anniversaries.
Below is a guide to setting up a common anniversary. See Holiday anniversary updates for what to do when an employee's anniversary date is reached.
If your common anniversary date is the 31st of March, there are steps you must take to make sure payroll moves forward to the new financial year before holiday updates are carried out.
- Go to the Tools menu and choose Options.
- Click the Leave tab.
- Select the option Use a Common Holiday Anniversary of and enter the date chosen as the anniversary.
Select the option Convert Holiday Pay to Annual Leave for employees started since last anniversary.
Not your company's first year of business?
You will need to manually check and re-set the employees' leave details.
- Under Pay Slips, select the leave details you would like to appear on the employees' pay slips.
When you select this option the software converts an employee's holiday pay balance into annual leave based on the following formula:
A = number of days from start date to common anniversary date
B = Annual leave entitlement
C = Portion of annual leave to be allocated
A/365 x B = C
The system inserts the value of C into the Annual Leave due as at field. The gross earnings and holiday pay balances return to zero and begin to accrue again for the next period.
A common anniversary means that all employees' annual leave updates are done at the same time. This differs from the usual individual anniversary which is 12 months after the employee's start date.
Businesses that observe an annual closedown often choose a common anniversary date to make managing leave easier.
To do this, businesses nominate a common anniversary date a few days before the annual closedown so that employees' leave is always available by the closedown date. This means that the employer can run the anniversary updates and finalise employee's leave before preparing pays for the closedown.
There are strict rules governing common anniversary dates. We suggest that you consult clauses 29 - 35 of The Holidays Act 2003 (the section covering under Closedown Periods) before setting up a common anniversary date. It's also a good idea to consult your legal representative before to setting up or changing your common anniversary date.
For guidance, contact the Department of Labour.
Choose a date that is shortly before the date of the closedown. For example, if your business normal closes from the 20th of December to the 2nd of January, the 16th, 17, or 18th of December would be good options.
This gives you time to update the annual leave records before running the last pays before the closedown.
You can, but changing a common anniversary requires checking and manually adjusting the annual leave records of all of your employees.
To make sure you understand the implications of changing a common anniversary, consult your accounting adviser first.
You should only use a common anniversary date if you have a closedown period. Otherwise, you should continue using individual anniversaries.
If you decide to change to a common anniversary date after your first year of business, you will need to manually check and reset all leave records for your employees.
There a very strict rules surrounding using a common anniversary and we recommend researching these thoroughly before deciding to use a common anniversary.
You can only change back to individual anniversary dates for new employees and employees who have been employed for less than one year. If you deselect the Common Anniversary date option in Payroll, all employees who have been employed for more than 12 months will keep this anniversary date. Employees who have been employed for less than one year will need their anniversary dates manually changed to 12 months from their start date.
New employees can be set up using their individual anniversary date.