Q: Just checking the procedure for this scenario:

A permanent employee has accumulated holiday pay, which has not yet rolled over and been converted to Annual leave, as they have not reached their 1 year anniversary date. So they have say $4000 of Holiday Pay due.

All employees in this company take the 2 weeks off over Christmas and New Years. They get their Stat Hols and any AL due to cover this time.

For the employee who hasn’t got any AL due, but has got Holiday pay due, can the employer make this employee take leave and not pay them when they have accrued holiday pay? I am thinking the employer must pay them Annual leave in advance up to the amount of Holiday Pay accumulated – is this correct?

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A: No, you must pay out the 8% because they have not yet reached their ANN date, as per below:

If an employee is not yet entitled to annual holidays
An employee may not yet be entitled to annual holidays at the start of the closedown if they’ve:

• not worked for their employer for 12 months continuously, or
• taken unpaid leave of more than a week and this has moved forward their anniversary date for annual holidays entitlement, or
• at some time, received pay for their annual holidays on a pay-as-you-go basis.

Pay-as-you-go annual holiday payments

If this is the case, their employer must:

• Pay them 8% of their gross earnings as at the closedown date
  Before a closedown starts (or, in their normal pay cycle, if this has been agreed in their employment agreement), they must be paid an additional 8% of their gross earnings up to the closedown date, from:
• the start of their employment, if they’ve not worked for their employer continuously for 12 months, or
• their last anniversary date for annual holidays, if they’ve already worked for their employer for at least 12 months – minus any amount already paid as 8% pay-as-you-go, or already taken as annual holidays in advance.

An employee could also agree with their employer to take some annual holidays in advance.

• Move the anniversary date for annual holiday entitlement 
  The anniversary date for their annual holidays entitlement will be moved to the date the closedown starts (or another nearby date that their employer chooses) – meaning they’ll receive their next leave entitlement 12 months from this date.

https://www.employment.govt.nz/leave-and-holidays/annual-holidays/annual-closedowns-and-holidays