Another year is fast passing by and there are now only six more working weeks until Christmas. As we usually do around this time of the year, McKone Consultancy would like to remind businesses/employers of their obligations around the Public Holidays and getting pay entitlements right for your people.
There are four public holidays to cater for over the Christmas / New Year period. Christmas Day, Boxing Day, New Year’s Day and the Day after New Year’s.
Depending on your industry you may also have a planned shutdown period.
So how do you ensure people get paid the right entitlements over this period?
Christmas Day and New Year’s Day. This year both Christmas Day and New Year's Day both fall on a Sunday. This means that these two days get moved to 27th December 2022 and the 3rd of January 2023 respectively.
Boxing Day and the Day after New Year's Day fall on Monday.
Under this year's arrangements, if an employee normally works a Sunday, Monday, and Tuesday, and they are also going to be working over the Christmas period, then you need to treat the Sunday as Christmas Day and the Monday as Boxing Day and pay the employee T1.5 for all hours worked on these days plus provide an alternative day of leave for each day, regardless of how long the employee worked on those days. Wednesday is treated as a normal day of pay. The same occurs the following weekend for New Year's Day and the Day after New Year's Day.
The employee is only entitled to one day to be treated as Christmas Day and one day to be treated as New Year's Day if they are working a Sunday to Thursday week.
If you close your business down and then the employee's leave is treated as Four Public Holidays and, depending on the terms of your employment agreement, the remaining days are annual leave.
If an employee works on a Public Holiday that falls on day they would not otherwise work, the employee does not get an alternative day of leave for working that Public Holiday. They must still be paid T1.5 for each hour they work on the Public Holiday. However, as with the above example if they work both Sunday and Wednesday the Wednesday is treated as a normal work day and they do not get T1.5 and they do not get an alternative day of leave for the Wednesday.
If any employee who normally works a Monday or a Tuesday (but not a Sunday) agrees to work on any of the Public Holidays, you will need to pay them at least time and a half for each hour they actually work and also give them a full alternative day's holiday for each Public Holiday worked, regardless of how long they work on the Public Holiday.
You should also check their employment agreement to check that payment for working the Public Holiday is only time and a half (which is the minimum payment). Some employment agreements may provide for a higher penal rate.
To determine the rate of pay for the Public Holidays, the Holiday Act 2003 provides that an employee is to be paid their “relevant daily pay” or, in some situations their “average daily pay”.
Where your employee is salaried and works regular hours, this should a straightforward calculation using “relevant daily pay.” However, where it is impossible or impractical to determine the relevant daily pay, due to the employee working varying hours, the “average daily pay” over the previous 52 weeks can be used.
When it comes to paying employees for Public Holidays, your employees are entitled to be paid for the Public Holiday, however, you should watch out for the following issues:
Consider whether the rate paid includes regular allowances or payments outside the employee’s base rate. These payments may continue to be automatically paid outside the relevant or average daily pay calculation, but if not, they will need to be taken into account as part of the calculation.
Where relevant daily pay applies, consider whether the employee has been paid according to the hours that they are likely to have actually worked (for example, if a waged employee regularly works eight hours at their base rate but then works two hours’ overtime on that particular day of the week, the relevant daily pay payable should reflect this).
Check that your payroll system is not defaulting to a “four-week look back” calculation for relevant daily pay. The Holidays Act used to provide for an averaging formula based on the last four weeks’ gross earnings, but since the average daily pay formula was introduced in 2011, this no longer applies to relevant daily pay calculations.