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Employee Setup if you have an Annual Closedown

If you have an annual closedown within 12 months of a new employees start date, you need to set them up to accumulate 8% of Gross Earnings. Follow this article to get this right.

Updated: November 2026

Info - Blue Block (1)If the annual closedown falls before the employee's 12-month annual leave allocation date, you MUST do the following:

  • pay out their 8% of gross earnings since the start of employment, and
  • move their annual leave anniversary date to the start of the closedown, or to a date of your choice near the closedown period.

Initial Employee Setup

When you first setup this new employee , use the leave setting: ' 8% of gross earnings (temp and irregular scenario)' - Accumulate and pay later.

Bulb - SearchingIf you have set up your employee incorrectly Click here to contact           our Help team for assistance to get this corrected. 

 

 

The below setting will calculate the 8% of gross earnings you MUST pay out at the annual closedown correctly.

Dashboard_Closedown_FirstSetup (1)

  1. In the 'Leave' tab of the Employee Profile, set the leave setting to '8% of gross earnings (temp and irregular scenario)'.
  2. Select the 'accumulate and pay later' setting so you can pay out the balance at the start of your annual closedown.
  3. The Sick Leave allocation date will be their start date. 

Info - Blue Block (1)If your employee requests leave in advance during this first year while they are on the '8% of gross' leave setting, pay this out as Holiday pay. Here is an article showing you how to do this. 

At the time of the Closedown

Step 1: Pay out 8% of Gross Earnings

Pay out the total amount of Holiday Pay showing at the bottom of their Leave Liability box, Holiday pay already paid has already been deducted.  Here is an article to show you how to do this.

Step 2: Updating Employee Settings

This can be done once the Holiday pay has been loaded in the timesheet for the closedown period or before you load the first pay after your annual closedown. 

There are three  changes to make so that your employee will accrue leave correctly:

Dashboard_Closedown_AllocationFix

  1. In the 'Leave' tab of the Employee Profile, change the leave setting to 'rate set as per the Holidays Act'. Check that the weeks of leave,  days in a week and hours are correct.
    1. We recommend the  'same as default standard week' setting if you have completed the 'set default entries for standard pay row of timesheet' in the Standard Pay tab.
      Alea_Salaried_DefaultEntriesRow
  2.  Change their leave anniversary date to the start date of the annual closedown, or another nearby date. 
  3. Change their 'date of most recent leave anniversary' to the start date of the closedown, or your chosen date.
  4. The sick leave anniversary date will remain as their original start date and do not change this.

 

  Have the wrong setting ? 

Please contact our Customer Support Team for assistance.

 

Info - Blue Block (1)If you are at all unsure about updating the employee's settings, have any questions, or would just like us to check everything is correct,  contact our Customer Support Team. We are here to help.

That is it! You have successfully updated your permanent employee's annual leave settings as affected by the annual closedown.

Info - Blue Block (1)Follow this link for more information on annual closedowns from Employment New Zealand. 

*Follow this link to access an Annual closedown flowchart.