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The law establishes clear holiday entitlements for employees, including peoples’ right to annual holidays. As an employer, it is essential that you understand: 

  • these entitlements; and
  • your related rights and obligations. 

Specifically, if your employees have accrued an excessive balance of leave, you may question whether you are entitled to force employees to take their leave.

This article explains: 

  • employees’ entitlement to annual holidays; 
  • how much they are entitled to; and 
  • when you can force them to take it.

When is an Employee Entitled to Annual Holidays?

All employees are legally entitled to four weeks’ annual holidays after twelve months of continuous employment. Importantly, unless you specifically agree otherwise, your employees have no right to take leave in their first year of employment.

Employees will have completed 12 months of continuous employment even if they are absent for:

How Much Holidays are Full-Time, Part-Time and Casual Employees Entitled To?

Permanent Employees

Permanent full-time and part-time employees are entitled to four weeks’ annual holidays. This comprises the hours of work that genuinely constitutes a working week.

For example, a full-time employee working five days a week will get twenty days’ annual holidays per year. In contrast, a part-time employee working two days a week will only have eight days’ annual holidays per year.

Permanent employees are paid for their holidays before the start of their holiday period, unless you have agreed to pay them during the regular pay cycle over which they take their leave. 

For example, suppose the employee takes two weeks of annual holidays from 1 October. In that case, you will generally need to pay them for the time they intend to take off for their annual holidays in the pay period before 1 October.

If you and your employee have agreed otherwise, it is useful to document this understanding in writing in the employment agreement, or some separate document.

Casual or Fixed-Term Employees

In place of their right to annual holidays, you may pay casual employees (i.e. those with intermittent or irregular work) and fixed-term employees (for less than 12 months) an additional percentage of their gross earnings each pay cycle. This will be the case if the:

  • employee agrees to receive this payment in their employment agreement;
  • percentage is no less than 8% of gross earnings; and
  • additional percentage is clearly identified in the rate of pay.

Make sure you review your employment agreement to that ensure it:

  • includes the employee’s consent to receive a percentage of their pay in place of their annual holidays; and 
  • clearly identifies and distinguishes the 8% against the employee’s gross earnings. 

When Can I Force My Employee to Take Holidays?

You can force your employee to take annual holidays where:

  • you give notice; or
  • the business is in a closedown period.

1. With Notice

If you have tried to reach an agreement with your employee to take their holidays with no success, you may require them to take leave with 14 days’ notice. 

For example, if the employee has accrued what the business perceives as an excessive annual holidays balance, you can detail these reasons in writing and force them to take their leave.

2. Closedown Period

If a business has a period of closedown, you can require your employees who have accrued holidays to use their leave over the closedown period. However, public holidays will not count as part of their leave days.

For example, your office may close over the New Year period. These rules can apply during this time.

In this situation, you must still provide them with 14 days’ notice. This is easily achieved through a company policy or in a company-wide email.

If the employee does not have any accrued holidays, you can require them to to take unpaid leave so long as you have provided them with 14 days notice.

When Can I Prevent My Employee From Taking Annual Holidays?

If an employee requests to take annual holidays, you may refuse their request. However, the law is clear that you “must not unreasonably withhold consent to an employees’ request.” Whether your refusal is unreasonable will depend on the circumstances. 

For example, it may not be unreasonable to refuse a request for holidays in circumstances: 

  • where another staff member will be on annual holidays; or 
  • because you require the employee to work to meet a particular business need.

Key Takeaways

All permanent employees are entitled to four weeks’ annual holidays relative to their working week. Casual employees and employees engaged for fixed-terms of less than 12 months are entitled to at least 8% of their gross earnings with each payment, in place of their holidays. You can force employees to take leave with 14 days’ notice: 

  • where the parties are unable to find an agreement; or 
  • during a closedown period. 

If you would like assistance reviewing and updating your fixed-term or casual agreements, contact LegalVision’s New Zealand employment lawyers on 0800 005 570 or complete the form on this page.

FAQs

How Do You Calculate Annual Holiday Entitlement?

Permanent employees receive four weeks’ annual holidays. This is prorated in proportion to their ordinary hours in a working week. For example, a part-time employee working two days a week will receive only eight days’ leave.

Can An Employee Take Annual Leave in Their First Year?

No, your employees typically have no right to take annual leave in their first year. It only accrues after 12 months of continuous employment. However, you can displace this general rule if you have agreed otherwise in writing.

When Must I Pay an Employee for Their Annual Holidays?

Unless you and your employee have agreed otherwise, you will need to pay your employee for their annual holidays before the start of their holiday period.

Are My Casual Employees Entitled to Annual Holidays?

In place of their right to annual holidays, many casual employees receive an 8% loading on their standard wage.

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