A small business can require staff to take a Christmas shutdown as annual leave, as long as it gives notice of at least twice the length of the leave under the Working Time Regulations 1998. The closed days are normally paid from each person's allowance; unpaid only works if the contract allows it. Bank holidays in the period are not deducted. The clearest approach is a short written policy that sets the dates, the funding and the notice out in advance.
What a Christmas shutdown is
A Christmas shutdown is when a business closes completely for a set period, usually between Christmas and New Year, so that all or most staff are off at the same time. It is common in offices, agencies, construction, manufacturing and professional services where there is little demand that week and it is more efficient to close than to run a skeleton team.
The closed days are normally funded from each employee's annual leave. Because three days in the period (Christmas Day, Boxing Day and New Year's Day) are bank holidays, a shutdown usually only uses a few days of actual allowance. In a typical year the working days that fall between the bank holidays are 27 to 31 December, minus any that land on a weekend.
There is no special legal category of "shutdown leave". You are simply requiring staff to take some of their normal annual leave on dates you choose. That is allowed, with the right notice, and it is the framework the rest of this guide is built on. Want the figure in pounds? Use our Christmas shutdown cost calculator.
Statutory holiday in the UK is 5.6 weeks (28 days for a five-day-a-week worker, capped at 28). A shutdown comes out of that entitlement; it does not add to it. The table below separates what the law fixes from what you decide as the employer.
| Set by law | Your choice as employer |
|---|---|
| You must give notice of at least twice the leave length | The exact dates you close |
| Staff keep their full 5.6 weeks across the year | Whether the days come from leave, are extra paid, or unpaid where the contract allows |
| Bank holidays are handled under each contract | Whether to let staff borrow from next year if they are short |
Can you require staff to take it as leave?
Yes. Under regulation 15 of the Working Time Regulations 1998, an employer can tell staff when to take their annual leave, including requiring them to take it on specific days for a shutdown. You do not need each employee's individual agreement, provided you give the correct notice.
The notice rule is simple: you must give notice at least twice as long as the period of leave you are requiring. So to close for three days you must give at least six days' notice; to close for a full five-day week you must give at least ten days' notice. This is calendar notice ahead of the leave starting.
| Days you close | Minimum notice (twice the leave) | In practice |
|---|---|---|
| 1 day | 2 days | Always give far more |
| 3 days | 6 days | Confirm by early December at the latest |
| 5 days (full week) | 10 days | Ideally set at the start of the leave year |
The legal minimum is the floor, not the target. A shutdown sprung on people in mid-December is lawful but lands badly, especially for anyone who has already booked those days for their own plans. The best practice for a small business is to put the shutdown in the contract or staff handbook and confirm the exact dates at the start of each year, so nobody is surprised and nobody double-books.
In Book Time Off you can set the shutdown as a blocked period so staff cannot book their own leave over those dates, then book the whole team off in a single group booking once the dates are fixed. It is the practical version of the notice rule: everyone sees the closed week on the same calendar. Start a free trial to set it up.
Pay during a shutdown: leave, paid or unpaid
How you fund the shutdown decides whether it costs you anything extra. There are three options, and most small businesses use the first.
From annual leave (most common)
The closed days come out of each person's holiday allowance. They are paid as normal, because holiday is paid. There is no extra cost: staff would be paid their salary whether they worked or took the leave.
Extra paid time off
You close but do not deduct the days from anyone's allowance, as a goodwill gesture. Staff keep their full holiday and are still paid. This is a genuine extra cost, equal to the wages for the closed days.
Unpaid (only if allowed)
Staff are not paid for the closed days. This is only possible if the contract gives you the right or the employee agrees. You cannot impose unpaid time off out of nowhere.
For most employers the answer is option 1: it is simple, paid, and free. Reserve option 2 for years when you want to reward the team, and treat option 3 as something to build into contracts in advance rather than spring on people.
A common mistake is assuming you can simply close and not pay. Without a contractual right or agreement, an unpaid shutdown risks an unlawful deduction from wages claim. If cash flow over Christmas is the worry, the honest fix is to plan the allowance, not to stop pay. Our cost calculator shows the figures for each option.
When staff have run out of holiday
The hardest shutdown cases are people who do not have enough annual leave left to cover the closed days. This is common late in the leave year, and especially for anyone who joined partway through and has a smaller pro-rata allowance. You have three fair options.
| Option | How it works | When it fits |
|---|---|---|
| Borrow from next year | Let the employee take a day or two from next year's allowance in advance | Good for reliable staff; note the reduced balance in January |
| Unpaid for the shortfall | Agree unpaid time off for the days they cannot cover | Where the contract allows it or the employee prefers it |
| Pay the days | Treat the shortfall as extra paid leave | A goodwill option, or where you would rather not run a negative balance |
Whichever you choose, the rule that keeps you safe is consistency. Decide one approach, write it into the policy, and apply it to everyone in the same position rather than negotiating person by person. Inconsistent treatment is what turns a routine shutdown into a grievance.
The shortfall problem is far easier to handle if you spot it early. Book Time Off shows every person's days used and days remaining at a glance, so you can see in November who will not have enough allowance for the shutdown and agree a plan calmly, rather than discovering it in the last week. Start a free trial.
Notice and communication
The legal notice rule (twice the length of the leave) is the minimum. Good communication is what actually makes a shutdown work. A simple sequence avoids almost all friction.
The strongest position is a contractual term that says the business may close over Christmas and require annual leave for those days. With that in place, the statutory notice rule is a backstop you rarely need to rely on, because everyone agreed to the shutdown when they joined.
Copy-and-paste policy template
The wording below is a starting point. Adapt it to your handbook style and contracts, and decide the funding and notice that suit your business. Keep the statutory notice rule in place and do not let a shutdown push anyone below their 5.6 weeks of statutory holiday across the year. Prefer to edit it in Word? Download the same policy as an editable document below.
Christmas shutdown policy template (UK)
The full policy as an editable Word document. Drop your dates and details into the bracketed fields, read the drafting notes, then delete them before issuing.
- 10 clauses built on the Working Time Regulations 1998
- Sample wording for the dates, funding and notice
- Blue placeholders show where to add your details
- Drafting notes explain the choices only you can make
- Document control panel and disclaimer included
1. Purpose and scope
This policy sets out how and when the Company closes over the Christmas period and how those days are treated for annual leave and pay. It applies to all employees. It should be read alongside the Company's annual leave policy.
2. The shutdown
The Company closes its [office / site / operation] for a short period each year between Christmas and New Year. During the shutdown, employees are not required to attend work and the normal working days in the period are taken as annual leave.
3. Shutdown dates
The shutdown for [year] runs from [start date] to [end date] inclusive. The working days requiring annual leave in this period are [number] days. Bank holidays falling in the period (Christmas Day, Boxing Day and New Year's Day) are not taken from annual leave and are handled under each employee's contract. The dates for each year will be confirmed in writing in advance.
4. How the shutdown is funded
The working days of the shutdown are taken from each employee's annual leave entitlement and are paid as normal holiday. [Optional: In [year] the Company is granting these days as additional paid leave that will not be deducted from annual leave.] Unpaid treatment will only apply where the employee's contract expressly allows it or the employee agrees in advance.
5. Notice
The Company will give notice of the shutdown of at least twice the number of working days being closed, in line with the Working Time Regulations 1998. Wherever possible the dates will be confirmed at the start of the leave year so employees can plan their remaining annual leave.
6. Employees with insufficient annual leave
Employees are expected to keep enough annual leave available to cover the shutdown. Where an employee does not have enough leave remaining, the Company will apply one of the following on a consistent basis: [allow a limited amount of leave to be taken from the next year's entitlement]; [agree unpaid leave for the shortfall]; or [grant the shortfall as paid leave]. The chosen approach will be confirmed to the employee in writing.
7. New starters and part-time employees
Employees who join partway through the year, and part-time employees, have a pro-rata annual leave allowance. The Company will check before the shutdown that affected employees can cover the closed days and will apply clause 6 where they cannot.
8. Bank holidays
Christmas Day, Boxing Day and New Year's Day are bank holidays. Whether they are paid and whether they form part of the 5.6 weeks of statutory holiday is governed by each employee's contract and is not changed by this policy.
9. Records and payroll
Approved shutdown leave will be recorded against each employee's annual leave balance. Payroll will be notified of the dates and of any unpaid days before the relevant payroll cut-off so that pay and balances are correct.
10. Review
This policy will be reviewed periodically and updated to reflect changes in employment law, ACAS guidance, or Company practice.
Your shutdown policy works best as part of a wider framework. Cross-reference it with your company leave policy, your bank holiday policy, and your wider time-off policy templates so managers and employees know which process applies in each situation.
Records and bank holidays
Two record-keeping points keep a shutdown clean. First, make sure the closed working days are booked against each person's annual leave, so balances are right and finance can see the cost. Second, keep bank holidays out of the allowance: Christmas Day, Boxing Day and New Year's Day are not normal working days and should never be deducted from anyone's holiday for the shutdown.
Before the December payroll run, confirm three things for every affected employee: the closed days are recorded as leave; anyone short of allowance has an agreed approach under the policy; and any unpaid days are flagged to payroll. Getting this right in advance avoids correction runs in January.
Working out the cost
If you want the shutdown in pounds before you commit, the Christmas shutdown cost calculator shows the payroll value of the closed days and the days taken from each allowance, and lets you compare funding it from leave, paid or unpaid. For the underlying allowance maths, the annual leave entitlement calculator and part-time holiday calculator cover pro-rata and new starters.
Book Time Off keeps all of this in one place: block the shutdown dates, book the whole team off in one group booking, and see every person's days used and days remaining at a glance, exportable to CSV for finance.
Manager checklist
Before you confirm a Christmas shutdown, work through these four checks.
Set and communicate the dates
Fix the closed working days and confirm them in writing with at least twice that many days' notice, ideally at the start of the leave year.
Decide the funding
Confirm whether the days come from annual leave (the usual route), are extra paid, or unpaid where a contract allows. State it in the policy.
Check who is short
Review remaining allowances in November. For anyone who cannot cover the days, apply one consistent approach: borrow, unpaid, or paid.
Book and notify payroll
Record the days against each person, block the dates so they are not booked over, and flag any unpaid days before the payroll cut-off.
Sources
Primary sources
| Legislation.gov.uk | Working Time Regulations 1998, reg 15 · The rule allowing an employer to require leave on set days, and the notice period. Checked June 2026. |
| GOV.UK | Holiday entitlement: booking time off · Confirms an employer can tell staff when to take leave, with notice. Checked June 2026. |
| ACAS | Checking holiday entitlement · The 5.6 weeks statutory minimum and how annual leave works. Checked June 2026. |
| GOV.UK | UK bank holidays · Confirms Christmas Day, Boxing Day and New Year's Day as bank holidays. Checked June 2026. |
| GOV.UK | Holiday entitlement · Overview of statutory holiday and how it is calculated. Checked June 2026. |
FAQs
This guide is general information for UK employers. Employment law depends on facts, contracts, and circumstances. If you are dealing with a dispute, a complex caring situation, or potential tribunal risk, contact ACAS or take professional legal advice.