Wow, how fast the year has passed us by. In a few weeks time workers up and down the country will be stopping to celebrate Christmas and the New Year with loved ones and friends.
As an employer, it is important that you get the pay entitlement right for your people over this time, whether they are working or not. 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?
First up – Christmas Day and New Year’s Day. This year both Christmas Day, Boxing Day, New Year’s Day and Day after New Year's day all fall on week days.
This means if you have staff who do not normally work on Wednesday or a Thursday, they will not be entitled to payment for the public holidays over the festive season. However, if you request these staff to work on any of these public holidays, and they agree to work then you will need to pay them at least time and a half for each hour they actually work. If Wednesday or a Thursday is not a normal working day for the employee they are not entitled to an alternative holiday.
If any employee who normally works a Wednesday or a Thursday 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 straight forward 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.