Yes. Under the Holidays Act 2003 your employer can have one annual closedown every 12 months and can require you to take your annual holidays during it, as long as they give you at least 14 days’ notice. You do not get to opt out of a properly notified closedown.
What almost no guide tells you is the second half of the rule. If you have not yet reached your 12-month anniversary, a closedown does not just pay you out 8% — it moves your anniversary date to the closedown start date. For a late-summer starter, that can delay your first four weeks of annual holidays by the best part of a year.
Key Takeaways
- Employers may have one closedown per 12-month period and must give 14 days’ notice, per Employment New Zealand.
- Employees with an entitlement must use their annual holidays for the closedown.
- Employees without an entitlement get 8% of gross earnings and their anniversary date is reset to the closedown start.
- Public holidays inside the closedown are still paid as public holidays and are not deducted from annual holidays.
What Counts as a Closedown Under the Holidays Act
A closedown is a period when an employer customarily shuts down all or part of the business and requires employees to take annual holidays. The classic New Zealand example is the Christmas–New Year shutdown in construction, manufacturing, professional services and much of the trades.
Three limits apply. The closedown can cover the whole business or just a defined part of it. There can only be one in any 12-month period. And it must be a genuine closedown — an employer cannot label a quiet week in June a “closedown” simply to clear leave balances, and cannot run a second one later in the year without your agreement.
Any additional shutdown beyond the one annual closedown has to be agreed between you and your employer, including how the time off is treated and paid.
The Three Rules Your Employer Must Follow
- Notice. At least 14 days before the closedown starts. Custom and practice does not replace notice — a business that has closed every Christmas for 20 years still has to tell people.
- Correct treatment by entitlement status. Employees who have reached their anniversary date take annual holidays. Employees who have not receive 8% of gross earnings.
- Other leave still works normally. Sick leave, bereavement leave, family violence leave and alternative holidays can still be taken during a closedown where the criteria are met, and are paid separately from the closedown arrangement.
The Part Most Guides Skip: Your Anniversary Date Moves
Here is the rule in full, from Employment New Zealand. If you are not yet entitled to annual holidays when the closedown starts, your employer must pay you 8% of your gross earnings since you started (or since your last anniversary date), less any amount already paid out for annual holidays taken in advance. Your anniversary date for annual holidays then moves to the date the closedown starts, or another nearby date your employer chooses — so your next entitlement lands 12 months from that new date.
This is not a penalty, and it is not employer discretion. It is how the Act keeps the 8% payment and the four-week entitlement from being paid twice for the same period. But the timing consequence is real, and new employees are almost never told about it when the closedown notice goes out.
Worked Example: The 8% Payment and the Reset
Sam starts on 1 March 2026 earning $1,200 gross a week. The business closes down from 22 December 2026.
At the closedown date Sam has about 42 weeks of service — short of the 12 months needed for an entitlement.
- Gross earnings 1 March to 22 December: 42 × $1,200 = $50,400
- Closedown payment: $50,400 × 8% = $4,032 gross
- Annual holidays entitlement used: none — Sam had none to use
- New anniversary date: 22 December 2026
Now look at what happened to the calendar. Without the closedown, Sam’s first four weeks of annual holidays would have arrived on 1 March 2027. After the reset, they arrive on 22 December 2027 — roughly nine and a half months later. Sam is not out of pocket, because the 8% covered the accrued value. But Sam has no bookable annual holidays for the whole of 2027 until Christmas, unless the employer agrees to advance some.
That is the planning point. If you start work in the first half of a calendar year at an organisation with a Christmas closedown, assume your first real block of annual holidays is about two years away, and negotiate advance leave up front.
What If You Are Entitled but Do Not Have Enough Days?
Very common — a closedown of 15 working days against a balance of six. Your employer cannot simply force the shortfall to be unpaid. Employment New Zealand sets out the options: your employer can allow you to take annual holidays in advance, or you can agree to another arrangement such as leave without pay or using another leave type.
| Your position at the closedown | What happens |
|---|---|
| Entitled, enough annual holidays | Employer can require you to use them |
| Entitled, not enough annual holidays | Advance leave or another arrangement, by agreement |
| Not yet entitled (under 12 months’ service) | 8% of gross earnings + anniversary date reset |
| Public holiday falls inside the closedown | Paid as a public holiday, not deducted from annual holidays |
| Genuinely sick during the closedown | Sick leave can apply if you are eligible |
The middle row is where employees have leverage. Unpaid leave during a closedown needs your agreement, so if the alternative on offer is three unpaid weeks in December, an advance against next year’s entitlement is a reasonable counter-proposal.
What a Closedown Cannot Do
It cannot take away public holiday pay. If Christmas Day, Boxing Day, New Year’s Day or 2 January falls on what would otherwise be a working day for you, it is paid as a public holiday and does not come off your annual holidays. Over a standard New Zealand Christmas closedown that is typically four paid public holidays inside the shutdown — check the dates in our 2026 New Zealand public holidays guide.
It also cannot be used twice, cannot be sprung on you with less than 14 days’ notice, and cannot override an employment agreement or collective that gives you something better.
What This Means for You
If you are an employee, work out now whether you will be entitled at the closedown date. If you will not be, ask your employer in writing to confirm the 8% payment and your new anniversary date, and ask what advance leave is available in the year that follows.
If you are an employer, send the notice more than 14 days out, split your payroll list into entitled and not-yet-entitled before you run it, and record every anniversary date change. Anniversary dates that quietly diverge from start dates are one of the hardest Holidays Act errors to unwind years later. Our New Zealand Holidays Act year-end checklist covers the December run in order, and the annual holidays guide explains how entitlements build in the first place.
Leave Balance stores an anniversary date per employee independently of their start date, so a closedown reset is recorded once and carries through every future entitlement calculation. Flat $10/month, unlimited employees, 14-day free trial.
This article is general information about New Zealand employment law as at July 2026 and is not legal advice. The Employment Leave Bill 2026, reported back to Parliament in July 2026, would replace the Holidays Act 2003 from 2028 if passed. Check Employment New Zealand or take advice for your situation.
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