Examples: Newcastle University, Queen's University, University of Florida.
It seems weird to give employees free leave. The Newcastle University page gives an explanation for why this happens:
The Christmas closedown is important to reduce the leave accruals of all staff and it helps to ensure staff remain healthy and have a good work life balance.
But if this is their concern, they could simply give their employees more annual leave and keep operating the university during December. That's what the companies I've worked for do, and I'd even say it's preferable, since the employees get to choose when to use their leave. As for leave accruals, there are other ways to handle it, such as "use it or lose it" or "unused leave is converted to salary".
Also strange is that two of these universities are in the Northern hemisphere. December in the Northern hemisphere is a winter month, so there's less daylight. If I'm going to go on holiday I'd much rather do so during the summer. It could still be that Queen's University & University of Florida staff go on holiday en masse to the Southern hemisphere where it's summer in December, but that stretches belief.
What's the rationale behind the Christmas closedown? If the closedown is so important, why not have a summer closedown instead?