Close Down Periods

For businesses that have an annual close down period the employer can require the duration of the close down be taken as Annual Leave. Depending on the current leave entitlements of each employee there are a few different ways to handle a close down with PayHero.

For additional guidelines on processing close down periods, see MBIE’s guidance here: Annual Closedowns & Holidays.

Annual Leave

If the employee has enough Annual Leave Due, or if the employer is happy for annual leave to be taken in advance, the close down can be processed through one annual leave request. 

Enter an annual leave request for each employee through PayHero’s Leave calendar with the start & end dates covering the close down period.

Unpaid Leave

If the employee has been employed for more than 12 months but doesn’t have enough annual leave due at the beginning of the close down, and the employer doesn’t want annual leave to be taken in advance, unpaid leave could be used instead. 

Enter an Unpaid Leave request into the leave calendar covering the required duration of the close down period. See our support article here: Unpaid Leave to ensure the unpaid leave processes as expected.

First 12 Months of Employment 

If the employee hasn’t been employed by the company for 12 months, they won’t yet have any Current Leave Due.

Prior to 2020, the employer and employee could agree that the employee would take annual leave in advance or unpaid leave, and their leave could be processed using one of the options above. This might still be a valid approach if you're not having a formally announced closedown but most staff are taking time off.

MBIE have changed their advice on close downs after recent case law. For the current close down period, the employee should be paid out their Holiday Pay Due balance and their leave anniversary changed to the date the closedown began (or just before if this would avoid having a different date for annual leave entitlements each year).

To apply this approach in PayHero, process the pay leading up to the close down as per usual. From the draft stage, select the employee you want to nominate a close down date for.

In the employee's draft pay, select the Set Close Down option from the menu. This option will only be available for employees with a start date in the last 12 months.

In the pop-up window that appears, designate a Close Down Date and click Set Close Down. It's important to ensure that this date will be on or before the start of your close down period each year, so that the employee's leave becomes due in time for the close down in future.

This will pay the employee any outstanding Holiday Pay (less any Annual Leave taken in advance, if applicable) and move their Next Anniversary to 12 months after the nominated close down date.

Public Holidays over a Close Down

Often close down periods occur over the Christmas & New Years Period where there are a number of public holidays. If a public holiday falls within the close down period, the employee is still entitled to payment for the public holiday, if the day would have been an Otherwise Working Day.

PayHero will apply the usual automated public holiday rules as covered in our support article here: Public Holidays. This will automatically reduce any leave requests by the number of days public holidays that it covers, however, it's always wise to double check the pay runs to ensure these process as expected.