Christmas shut-downs: not everyone's rejoicing


Christmas shut-downs: not everyone's rejoicing

Planning a shut-down over the Christmas/New Year period? Brace yourself: you may cop some backlash. Mike Toten explains.

Planning a shut-down over the Christmas/New Year period? Brace yourself: you may cop some backlash.
The business advantages of a shut-down are obvious – cost savings, few customers around, suppliers are also closed and it ensures that all employees have a break from work and return refreshed, even those who try to avoid taking annual leave at all. But many employees don’t like the practice, and it may have hidden costs in terms of disengaged employees and higher staff turnover.

In 2018/9, the final Friday before Christmas is 21 December, both Christmas Day and New Years Day are on Tuesdays and Boxing Day/Proclamation Day on a Wednesday. The first “full” business week of 2019 commences on Monday 7 January. Businesses that close will not be trading for seven business days and three public holidays. Seven days is more than one-third of most employees’ annual leave entitlement.

Why some employees dislike it

Christmas/New Year suits many employees as a time to take annual leave, but they can always choose to take annual leave at this time. It is the impact on other employees that can cause problems, particularly the following employees:
  • Those who started during the year and have yet to accrue a full year’s annual leave entitlement. Those who started after the end of August 2018 may not even have accrued enough paid leave to cover the seven days described above, so unless you are willing to cover the gap or provide some sort of credit arrangement, part of their compulsory leave will have to be unpaid.
  • Note that 3-12 months is one of the main “danger” times for employee turnover. Employees have been there long enough to form some firm opinions of what your business is like to work for and whether the job suits them, so giving them some “bad news” can be risky. 
  • Those with cultural backgrounds that do not observe Christmas, but may have other celebration times/events at other times of the year.
  • Those who want to save their annual leave for non-peak holiday times (cheaper and easier to book) or who want to take their full 20 days per year at once, eg to take an overseas trip. If they are continually forced to take part of their entitlement each Christmas/New Year it may take them several years to accrue enough leave to achieve their goals.
  • Those who prefer to use a quiet time at the workplace to catch up on major projects or do “housekeeping” type of work that they cannot find enough time for during busier periods.

What are the costs to your business?

  • Employee disengagement, driven by losing control over a part of their employment conditions, and resentment that an organisation that preaches “flexibility” fails to actually provide it.
  • Increased labour turnover, if employees are attracted to other employers who are more accommodating of their preferences for taking leave – especially larger ones.

What can you do?

Small businesses usually have less flexibility (and perhaps more cost pressures) to accommodate employees, but it’s in their interests to try to do so.

The following are some possible options:
  • The regular informal conversations that managers should be having with each employee should identify what his/her circumstances and preferences are.
  • Close the office but allow the employee to work from home during the break. If you are worried that the employee may be distracted by family celebrations, sporting events, etc, discuss and set work outcomes beforehand.
  • Let employees take unpaid leave during Christmas/New Year. They will lose seven days’ work income (you still have to pay them for public holidays) but some may consider this option worth the trade-off. 
  • Pay employees for their compulsory Christmas/New Year annual leave, but let them take unpaid leave at another time that suits both parties.
All these options are likely to be cost-effective in cases where many employees regard loss of annual leave flexibility as a potential deal-breaker. There will be indirect savings that may offset the upfront costs.
Finally, when hiring new employees, mention the compulsory December/January annual leave policy before making the job offer. They may not like it, but at least they can make arrangements to deal with it and it won’t be a nasty surprise later on.
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