How to Pay an Employee for an Annual Shutdown When They Have Been Employed for Less than One Year

Here is a quick guide on how to process an annual shutdown for an employee who has been employed for less than one year. In this situation, the Holidays Act 2003 requests that you:

  1. Pay out the employee 8% of their gross earnings since their commenced-on date.
  2. Deduct back any annual leave taken in advance.
  3. Reset their annual leave anniversary to the date of the shutdown.

This is automated by Crystal Payroll, but does require setting up for those employees.

Head over to "Company Settings", and then "Payroll Settings".

Open "Leave Settings" along the top of the menu.

Open "Standard Leave Entitlement".

Down the bottom of this section, tick "Enable Annual Shutdown Holiday Pay for New Employees".

Select "Save" down the bottom of the page.

Head over to "Employee Settings" and then "Employee Details".

Select the employee from the left-hand side of the page.

Open "Default Entitlement" under "Other Details".

Enter the "Annual Shutdown Start Date" just a few lines under "Accrue Leave" which is on the left-hand side of the menu, under "Annual Leave Entitlement".

Select "Save" down the bottom of the menu.

When you process the pay period that this shutdown sits within, the system will now add an additional payment item to the employee's pay.

You can click on the blue and underlined "Annual Shutdown Holiday Pay" payment item down the bottom of the page to see how it has been calculated.

Additionally, you can click on the "Information" ( i ) buttons to the right of each line of calculation to see how this result was calculated.

Once the pay period has been completed, under the employee's "Entitlement Given" settings, you can see that the system will change the employee's anniversary. You cannot delete this entry unless you reverse the pay period the annual shutdown was processed within.