A closedown is when your business temporarily closes and employees are required to take leave during that period - most commonly over the Christmas and New Year break. If you shut your business down with a formal 'closedown' period, there are different rules to take into account.
How closedowns work under the Holidays Act
When you close your business for a set period, you can direct employees to take annual leave during the closedown. How you pay them depends on how long they've been employed:
Employees with 12 or more months of service use their annual leave balance to cover the closedown period. If they don't have enough leave accrued, you can either agree for them to take leave in advance, or they take unpaid leave for the shortfall.
Employees with less than 12 months of service haven't yet earned their full annual leave entitlement. You have two options for these employees:
Pay out 8% of their gross earnings since their start date (or since their last entitlement date), which essentially treats the closedown as if their anniversary had occurred, or
Grant annual leave in advance of their entitlement
How PaySauce handles closedowns
PaySauce will automatically calculate leave balances and apply accrued or anticipated leave for the closedown period if you enter this as annual leave taken in the normal way.
If you prefer to pay the 8% of gross earnings method for eligible employees rather than using leave balances, please contact our support team. This requires some manual adjustments to override the automatic calculations, and we're happy to help you get it set up correctly.