A North East SME decides to close from Christmas Eve until the first working day of January. Management assumes the whole period can simply be deducted from everybody’s annual leave. That is where avoidable disputes start. Bank holidays, normal working patterns, contractual wording, available balances, sickness and statutory leave can all change the answer. Christmas shutdown annual leave is manageable, but the employer needs one accurate plan before telling people what will happen.
Map the closure before deducting any leave
Start with the dates on which the business will not operate, then map them against each worker’s normal working pattern. In England and Wales, Christmas Day falls on Friday 25 December in 2026 and the Boxing Day substitute bank holiday is Monday 28 December. A weekend or non-working day should not be deducted as though it were one of that person’s working days.
Separate the bank holidays from any additional closure days. A business closing on Thursday 24 December and reopening on Monday 4 January may need different deductions for a Monday-to-Friday employee, a part-time worker who never works Mondays, and a shift worker whose rota includes weekends. Publish the exact closure, reopening and leave-deduction dates rather than saying only that the business is ‘closed over Christmas’.
GOV.UK: UK bank holidays ↗ · Acas: bank holidays and Christmas ↗
Check what the contract says about bank holidays
Almost all workers are entitled to 5.6 weeks of paid statutory holiday each year. For someone working five days a week, that is normally 28 days. Bank holidays can be included within that statutory entitlement; there is no separate automatic right to paid time off on a bank holiday. The contract or holiday policy should say whether bank holidays are included, added on top or handled through a shift arrangement.
Do not assume the same number of days works fairly for everybody. Part-time workers still receive 5.6 weeks, usually expressed pro rata in days or hours. A part-time colleague should not lose a disproportionate share of entitlement merely because more bank holidays fall on days they normally work. Check the full-year result, not just one December payroll entry.
GOV.UK: holiday entitlement ↗ · Related guide: part-time workers’ rights →
Give the right notice for compulsory leave
An employer can require a worker to take statutory leave on specified dates, including during a Christmas shutdown. Under regulation 15 of the Working Time Regulations 1998, the default notice is at least twice as many calendar days in advance as the amount of leave being required. Five days of compulsory leave therefore needs at least ten calendar days’ notice before the first specified day.
A relevant agreement, such as the contract or a workforce agreement, can vary or exclude the default notice rule. Check the document before relying on a customary closure. Even where the contract already reserves Christmas shutdown days, confirm the actual dates, number of days or hours to be deducted, reopening arrangements and effect on each balance. Early written notice gives people a fair opportunity to query an error before travel, childcare and pay are affected.
Working Time Regulations 1998: regulation 15 ↗ · GOV.UK: booking time off ↗
Deal with short balances before the closure
A worker may have insufficient entitlement because they joined late in the leave year, have already used their balance or work irregular hours. Do not convert the gap into unpaid leave without checking contractual authority or obtaining agreement. Acas says employers can require unpaid leave at times only where this is agreed in the contract.
Practical options may include allowing a limited amount of next year’s contractual leave in advance, offering available work during the closure, agreeing paid special leave, agreeing unpaid leave, or changing the closure plan for that role. Apply the chosen approach consistently while recognising genuine differences in contract, start date and working pattern. Record any advance leave or repayment arrangement clearly so payroll and the employee see the same balance.
Check the balances before announcing the shutdown.
HR + SAFETY can help North East SMEs review contracts, calculate compulsory leave and prepare one clear communication for managers, workers and payroll.
Discuss your Christmas closure planDo not override sickness or statutory leave
Compulsory closure leave is not a way to use up entitlement that a worker cannot genuinely take. GOV.UK says an employer cannot force a sick worker to take holiday. If someone reports sickness during planned holiday, follow the sickness-reporting and evidence process and decide how the period will be recorded. A worker may request holiday while off sick, but that is their request rather than the employer’s shortcut.
Annual leave also cannot run at the same time as maternity leave or another statutory family-leave period. Entitlement continues to build, and statutory holiday that cannot be taken because of family-related leave must be carried over. Identify affected workers before issuing a blanket deduction and agree when accrued holiday will be taken before or after the statutory leave.
Acas: sick pay and holiday pay ↗ · Acas: holiday and maternity leave ↗ · Related guide: holiday entitlement during sickness →
Get payroll and records aligned
Give payroll one approved schedule showing each person’s closure hours, bank-holiday treatment, annual-leave deduction and any agreed alternative. Holiday pay must be calculated under the rules applying to the worker’s pay and working pattern; do not assume the same daily figure works for regular, irregular-hours and part-year workers.
Since 6 April 2026, employers must keep records adequate to show compliance with annual-leave and holiday-pay requirements and retain them for six years. The shutdown announcement, individual balance report, authorised changes and payroll outcome should form one clear audit trail. If the leave year ends on 31 December, also remind workers what remains, encourage them to use it and explain when untaken statutory leave may be lost or carried forward.
GOV.UK: holiday pay and records ↗ · Related guide: holiday pay records →
Christmas shutdown annual leave checklist
Law and official guidance were checked on 5 November 2026. The practical answer depends on the contract, leave year, working pattern and reason a person cannot take the planned leave. A published shutdown calendar is useful, but it does not replace checking each worker’s entitlement and circumstances.
- Confirm the last working day, every closed day and the reopening date.
- Map the closure against each worker’s normal days or hours.
- Check whether bank holidays sit inside or outside contractual entitlement.
- Calculate current balances, including starters and irregular-hours workers.
- Check the contract or relevant agreement for closure and notice wording.
- Give written notice at least twice the required leave in calendar days unless a relevant agreement changes the rule.
- Resolve insufficient balances without assuming unpaid leave is permitted.
- Exclude or separately manage sickness and statutory family leave.
- Send payroll an approved, person-by-person closure schedule.
- Keep the announcement, balance changes, holiday-pay record and approvals for the required period.
Plan the closure as a set of individual working-day and entitlement decisions. Confirm the contract, give valid notice, resolve short balances, protect sickness and statutory-leave rights, and make sure payroll records the same arrangement that managers communicated.
This guide provides general information for UK employers. It is not legal advice and should not replace advice based on the facts of a specific matter.