Christmas closedown NZ: what you pay staff over the break, and the date the cash has to be there

For a Christmas closedown in NZ, you need to give staff at least 14 days’ written notice, and you can have only one annual closedown in any 12 months. Staff who have annual holidays must use them, and unless they’ve agreed otherwise, that holiday pay is due before the break starts. Staff with under 12 months’ service get 8% of their gross earnings to date instead. The paid public holidays fall on 25 and 28 December and 1 and 4 January.

The rules are the easy part. The harder part is the money: the date it leaves your account, and how much leaves at once. In many businesses, the last pay run before Christmas is the biggest of the year, and it lands just as takings slow down and customers stop paying. This guide sets the Holidays Act closedown rules against a dated 2026–27 calendar so you know the amount and the date.

What does the Holidays Act let you do with an annual closedown?

Employment New Zealand’s annual closedowns guidance sets out these rules:

• One annual closedown in any 12-month period. Different parts of the business can close at different times, but each part gets one.
• At least 14 days’ notice before the closedown starts.
• Entitled staff must use their annual holidays for the closedown, and you pay them in the usual way.
• Staff not yet entitled (under 12 months’ continuous service, or paid holiday pay as they go) get a payment of 8% of earnings instead.
• Public holidays inside the closedown are paid if they fall on a day the employee would normally work, and that pay is kept separate from the leave.

So yes, you can make staff take annual leave over Christmas in NZ, as long as it’s your annual closedown and the notice is right. A second closedown later in the year, such as a winter week off, needs each employee’s agreement.

The current Holidays Act still applies over this break and the next one. Its replacement, the Employment Leave Act, isn’t due to start until August 2028.

When does the 14-day closedown notice have to go out?

Count back 14 days from the first day you’re closed. Here’s an example closedown used throughout this guide: last trading day Tuesday 22 December 2026, closed Wednesday 23 December, back on Monday 11 January 2027.

Date	What happens
Fri 27 Nov 2026	Sensible date to send the notice, with time for questions and leave balance checks
Wed 9 Dec 2026	Last day to give 14 days’ notice for a 23 December start
Tue 22 Dec 2026	Last day of trading. Holiday pay due before the break unless agreed otherwise
Fri 25 Dec 2026	Christmas Day (paid public holiday)
Mon 28 Dec 2026	Boxing Day, observed for Monday–Friday staff
Fri 1 Jan 2027	New Year’s Day
Mon 4 Jan 2027	Day after New Year’s Day, observed for Monday–Friday staff
Fri 15 Jan 2027	GST for periods ending 30 November, and the second provisional tax instalment for many
Wed 20 Jan 2027	PAYE on December wages due for most small and medium employers

The public holiday dates come from Employment New Zealand’s public holidays list. Boxing Day and the day after New Year’s Day fall on Saturdays this season, so Mondayisation applies to anyone who doesn’t normally work Saturdays.

Send the notice earlier than the legal minimum. It costs nothing, and it gives you time to check every leave balance before you know what the pay run will cost.

How many days of annual leave does the closedown actually use?

Fewer than most owners expect, because the public holidays do some of the work. Our example closedown runs from 23 December to 8 January, which is 13 weekdays. For someone who works Monday to Friday:

• 4 days are paid public holidays: 25 December, 28 December, 1 January and 4 January.
• 9 days come out of annual leave.

Nine days is just under two weeks of a four-week entitlement. If the business runs a different roster, such as a cafe that trades Saturdays or a crew on a four-day week, do this count employee by employee. Mondayisation depends on whether that person would have worked the actual day.

Annual holiday pay is worked out at the greater of ordinary weekly pay or average weekly earnings over the previous 12 months. For staff with overtime, commission or a busy spring, the holiday pay can be noticeably higher than their base wage.

Can staff without enough annual leave be made to take unpaid leave?

This is one of the most common closedown questions, and the answer depends on which group the employee is in.

Entitled, but short of leave. Say someone has 6 days left and the closedown needs 9. Employment New Zealand says you can choose to let them take holidays in advance, or the two of you can agree that they use alternative holidays, leave without pay or other leave. The guidance gives an example of an employer who limited the advance on purpose, so the employee would still have enough leave for next year’s closedown. Get any agreement in writing. If you can’t reach agreement, take advice before you dock anyone’s pay.

Not yet entitled (the 8% group). For staff with under 12 months’ continuous service, you can require them to stop work for the closedown. You pay them 8% of their gross earnings up to the closedown date, less anything already paid for holidays taken in advance or holiday pay paid as they go. Apart from paid public holidays, that 8% is their pay for the closedown. Their anniversary date then moves to the closedown start, or to a date nearby that you nominate. That way they become entitled to holidays again at the start of next year’s break.

People in the 8% group often get two cheques in one: the lump sum, plus public holiday pay for the days they’d normally have worked. Budget for both.

How big is the last pay run before Christmas?

Employment New Zealand says employees are entitled to be paid for annual holidays before they start, unless you’ve agreed in writing that holiday pay goes through the normal pay cycle (taking annual holidays). Open your employment agreements and find that clause before you do anything else.

• If there’s no pay-cycle clause, the closedown holiday pay goes out in the last pay before 23 December, on top of that week’s wages.
• If there is a clause, holiday pay follows your usual paydays through the break. You still need cash in the account on 30 December and 6 January, even though the doors are shut.

Worked example: a six-person Hamilton joinery

Illustrative figures only. Five staff with more than 12 months’ service each earn $1,250 a week gross ($250 a day), Monday to Friday. A sixth started in May and has earned $30,000 gross by 23 December. There’s no pay-cycle clause, so holiday pay is due before the break.

Item	Amount
Normal week’s wages, five long-serving staff	$6,250
9 days’ annual leave each, five staff	$11,250
4 public holidays each, five staff	$5,000
Closedown 8% for the newer employee	$2,400
Newer employee’s normal week plus 4 public holidays	$2,250
Gross pay in the last run before Christmas	$27,150
Employer KiwiSaver at 3.5% on that gross pay	about $950

A normal week’s gross payroll for this business is $7,500. The Christmas run is more than three and a half times that. It’s paid in the same week that customers’ accounts teams start leaving for the summer, and nothing more is billed until mid-January.

Employer KiwiSaver contributions are at least 3.5% of gross salary or wages, according to Inland Revenue. Holiday pay goes through payroll like any other pay, so contributions apply to it. ESCT is deducted from those contributions as usual. Our KiwiSaver cash-flow guide covers the step-up to 4% in 2028.

If someone resigns over the break, their unused leave is paid out by the pay day of their final pay period. Final pay in New Zealand covers how that works.

If that figure is bigger than the balance you’ll have on 22 December, there’s still time to fix it. You can check your options now, while lenders, valuers and lawyers are working full weeks.

What does Inland Revenue expect over the break?

The tax side of a closedown has its own timing:

• Payday filing pauses. Employment information is normally due within 2 working days of each payday (Inland Revenue). Inland Revenue doesn’t count 25 December to 15 January as working days for this, so a payday on 30 December or 6 January isn’t due for filing until 2 working days after 15 January.
• PAYE is a January bill. For most small and medium employers, PAYE on December wages, including all that holiday pay, is due on 20 January. For our joinery, the PAYE on the biggest pay run of the year falls due five days after the 15 January GST and provisional tax dates.
• Lump-sum tax. The closedown 8% and other holiday pay paid in a lump may be taxed at a higher rate, using the extra pay rules. Staff sometimes ask why their Christmas pay looks smaller than they expected, so explain it before payday.

So the cash goes out twice: the net wages before Christmas, then the PAYE, KiwiSaver and ESCT a few weeks later. The summer shutdown cash plan shows how to set that against slow January receipts.

What if a skeleton crew works through?

Plenty of businesses close the office but keep a crew on, such as dispatch, a maintenance team or one cafe front. Anyone who works a public holiday that is an otherwise working day for them gets at least time and a half for the hours worked, plus a paid alternative holiday to take later. A crew working 25 December and 1 January costs more than a normal week. They also go into the new year with alternative holidays still to take, which is a cost you carry forward.

A closedown cash checklist, with dates

• By Fri 20 Nov: pull every employee’s leave balance and check each agreement for a pay-cycle clause.
• By Fri 27 Nov: send written closedown notice, comfortably ahead of the 9 December minimum.
• By Fri 4 Dec: agree advance leave or unpaid days in writing with anyone who’s short.
• By Fri 11 Dec: work out the last pre-Christmas pay run to the dollar, including each 8% amount and the public holidays.
• By Tue 15 Dec: confirm the cash is in the account, or that the funding you arranged has landed.
• Mon 18 Jan to Wed 20 Jan: file employment information for holiday paydays and pay December PAYE.

If one week’s payroll goes wrong anyway, payroll due this week covers the 24-hour version of this problem.

The Christmas pay run is big. You can sort it out in November

A closedown is a good way to give a team a proper rest. The trouble is the timing: wages, holiday pay and public holidays go out in one run in December, while the money to pay for them often doesn’t arrive until late January. A business line of credit set up in November, or a short cash flow loan sized to that one pay run, can cover the gap until customers are back at their desks. Smaller unsecured amounts can sometimes be funded the same day, but nobody should count on that on 22 December, when half the country has already left for the beach.

The enquiry takes about a minute, and simply asking won’t affect your credit score. There’s no credit check at the enquiry stage. We won’t send your details to a crowd of lenders, so your phone won’t start ringing with calls from strangers. A real person reads what you’ve sent, looks at your payroll dates and your trading pattern, and calls you to talk through what’s realistic. Please fill the form in accurately, including the pay run figure and the date you need it covered, so the first option we put to you is the right one.

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