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  • Annual closedowns (New Zealand)




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New Zealand only

Many businesses have an annual closedown period, often over Christmas or seasonally based on industry. You can ask your employees to take annual holidays during the closedown, provided you give them 14 days’ notice. Depending on an employee's duration of employment, there are different rules that apply.

Less than one year

If the employee has been employed for less than one year, or they're not yet entitled to annual holidays at the time of the closedown, you must pay them 8% of their gross earnings (less any amount already paid as 8% pay as you go or already taken as annual holidays in advance) as at the closedown date.

In addition:

  • the employee’s anniversary date for annual holiday entitlement purposes is moved to the date the closedown starts (or in some situations, an alternative date close by as nominated by the you)
  • the employee may agree to take some annual holidays in advance.

Here are the details:

To pay 8% of gross earnings

To handle this, you'll need to create a new earning pay item.

  1. Go to the Payroll menu and choose Employees.
  2. Click to open the employee's record.
  3. Click the Pay items - earnings & deductions tab.
  4. Under Earnings, click the Add earning dropdown arrow and choose Create new earning.
  5. Set up the new earning:
    1. For the Type, choose Standard.
    2. Enter a Name, such as "8% Holiday Pay for Closedown" or similar.
    3. If you like, enter the same or a different name to appear on the employee's payslip.
    4. For the Rate, choose Fixed amount and leave the Amount as 0.00.
    5. For the Tax, choose Taxable.
    6. Select the option Don’t include in gross earnings when calculating leave payments.
    Here's our example:
  6. Click Save to save the earning, then click Save again to save the employee's details.

You can now pay the employee

  1. Start a new pay run.
  2. Click Add holidays or leave.
  3. Click Final pay.
  4. Note down the Final pay amount then click Cancel.
  5. Enter the amount noted against the closedown earning created earlier.
  6. Finish processing the pay as normal (need a refresher?).
To move the anniversary date and clear leave balances
  1. Go to the Payroll menu and choose Employees.
  2. Click to open the employee's record.
  3. Click the Leave tab.
  4. Under Annual leave, change the Anniversary date to the closedown date, or alternate nominated date (within reasonable proximity to the closedown date).
    As you paid out the full 8% holiday pay accrued to date, you must also clear any accrued hours.
  5. Clear any value from the Available opening balance field.
  6. Take note of the Current balance part-year estimate.
  7. Enter this noted amount as a negative value in the Part-year estimate adjustment field.
    Here's our example:
  8. Click Save.
The Current balance part year estimate will only update when you process your next pay.

More than one year

In this case, process the employee's leave as normal. If they have no leave available, or not enough to cover the shutdown period, you can agree with them to use leave in advance or leave without pay.