What is a closedown period and how does it affect what employees are paid?

A closedown period is a specific period of time that the whole or part of a business stops operating.

Every employer is entitled to implement an annual closedown period, as permitted by the Holidays Act.

An annual closedown period is usually at the end of the year, but an employer can set the closedown at any time of the year. Under the Act, an employer must give at least 14 days’ express notice to employees before any closedown period.

The Act only permits one closedown per year, so if an employer wishes to stop operations again, they must obtain the consent of their employees.

There is no minimum or maximum time frame for closedown periods under the Act. However, an employer is obligated to implement a customary closedown each year, which means the closedown must align with past practice. This will generally fall around the Christmas period, as this is when most businesses choose to implement their closedown period.

During the annual closedown an employer can require their employees to take annual leave under the Act. However if there is a second closedown during the year the employer cannot require employees to take annual leave. 

If an employee does not have any, or enough, annual leave because they have used up their leave, they may be required to take unpaid leave, unless the employer agrees to pay leave in advance. However if they have not been working for the employer for 12 months, they are entitled to 8% of their gross earnings to date.

If the closedown period falls over a public holiday, for example New Year’s Day, and it is a usual working day, employees are entitled to public holiday benefits rather than annual leave.

If an employee becomes sick or faces a bereavement over the closedown period, they may also request to take that time as sick leave or bereavement leave instead of annual leave.

The requirements of closedowns and an employer’s obligations over a closedown period can be confusing. If you are struggling to understand your obligations or rights, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.