Seasonal Scenarios

Date: 19th December 2013


November 2015: This post has been checked and updated.

Yes it’s the silly season: the time for staff parties, annual leave and maybe even bonuses!  Here are some serious things you may need to consider.

Christmas Functions

What are the tax implications for your business holding an out-of-town Christmas party for staff?

The cost of the Christmas party itself will be subject to the entertainment rules, so the deduction for this expenditure will be limited to 50%. The travel costs to the party will be deductible to the business as staff remuneration costs but keep in mind that providing travel to a Christmas party is a fringe benefit.


Are bonuses included in the calculation of an employee’s annual holiday pay?

This depends. Two rates are used to work out an employee’s annual holiday pay: “ordinary weekly pay” and “average weekly earnings”. Once each is calculated, the higher of the two is used as the rate of payment for annual holiday pay.

Closing down for the holidays?

A closedown period is when an employer closes business operations for a certain length of time, often doing so during off-peak times of the year.

Many businesses tend to do this over the Christmas break and many employees are happy to take this time to enjoy summer holidays with family.  But there are some rules that employers need to be aware of before shutting up shop:

  • There may only be one closedown period per year, although employers can shut down different business sectors at different times of the year
  • Employers must give staff at least 14 days’ notice of the closedown period
  • Employers can require staff to use their annual holidays over this time.  Public Holidays are still recognised during the closedown period and are treated as such

There are many benefits for employers during closedown periods, including less disruption to productivity and a reduction in labour and operating costs.  If you are planning on closing down over Christmas, be sure to let your clients know.  It’s not only courteous but is a good way to touch base and wish them a Merry Christmas.

Check out for more information on annual closedowns.

Annual Leave

If an employee has been working non-stop all year without a break, will s/he lose their annual holidays if they do not take them in a year?

No. Even if the employment agreement says that annual holidays will be forfeited if not taken, it is unlawful for an employer to enforce such a clause.

Public holidays

When is an employee entitled to a public holiday?

There is no minimum period of time an employee has to be employed to become entitled to a public holiday and it does not make a difference if an employee is classed as casual, part time or full time.

All employees would be entitled to be paid for a public holiday if the public holiday falls on a day that would have been an otherwise working day for the employee. This means, but for the day being a public holiday the employee would have worked on day concerned. In other words, if it was not a public holiday, would the employee have been working on that day? If the answer is yes, they would be entitled to have the day off on pay; if the answer is no, they are not entitled to observe the public holiday.  More information at the Department of Labour website.

Alternative public holiday

Can an employer and employee agree to celebrate a public holiday on a different day?

Yes, an employer and employee may agree that an entire public holiday is to be observed on another calendar day or 24-hour period which would be otherwise a working day for the employee. This agreement needs to be in writing. It can be in the employment agreement but does not have to be.  More information at the Department of Labour website.

More about calculating holiday pay, annual leave and public holidays.

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