The Holidays Act 2003 can be challenging for employers in New Zealand to comprehend, leading to difficulties in correctly calculating and paying employees for public holidays. While changes are expected in 2023, it remains crucial for all employers to ensure accurate payment and adherence to legal requirements.
This comprehensive article offers valuable insights into public holiday payments and addresses common queries about leave management and payment procedures.
When Public Holidays Fall on Weekends (Mondayisation)
In cases where a public holiday lands on a Saturday or Sunday, the holiday may be observed on the following Monday (or Tuesday in some instances).
This “Mondayisation” rule applies to employees who do not usually work on the calendar date of the public holiday. Employees with regular working hours on the holiday date do not have their public holiday benefits shifted to Monday.
It’s important to note that employees cannot receive double benefits for two public holidays. If an employee would typically work on both the calendar date and the observed day of the public holiday, their entitlement remains on the calendar date.
Example: Christmas and New Year’s 2021-22
Here’s an illustrative example of how four public holidays falling on weekends are observed on Mondays and Tuesdays:
– Christmas Day: Saturday, December 25 (Observed on Monday, December 27)
– Boxing Day: Sunday, December 26 (Observed on Tuesday, December 28)
– New Year’s Day: Saturday, January 1, 2022 (Observed on Monday, January 3, 2022)
– Day After New Year’s Day: Sunday, January 2, 2022 (Observed on Tuesday, January 4, 2022)
In 2022, Waitangi Day (February 6) also falls on a Sunday, resulting in its observance on Monday, February 7.
Let’s Compare Two Employees
To better understand the implications, let’s consider the situations of two employees:
1. Gilbert, a nurse, works shifts from Thursday to Monday. As he normally works on Saturdays and Sundays, he receives public holiday benefits (time-and-a-half pay and a day off in lieu) on the calendar date.
2. Gina, a business analyst with a standard Monday-to-Friday schedule, does not usually work on weekends. Hence, her public holidays for Christmas/Boxing Day and New Year’s, along with the day after, are moved to the respective Mondays and Tuesdays. If Gina is on annual leave during this period, these days are paid as public holidays and do not affect her annual leave balance.
Determining “Otherwise Working Days”
For employees with fixed work schedules, determining public holidays is relatively straightforward. The key question is whether the public holiday falls on a day the employee would typically work—an “otherwise working day.”
This criterion easily applies to employees with fixed work patterns, such as those working Monday to Friday. They typically receive all 11 public holidays, except if they are on unpaid leave.
Variable schedules pose challenges, but most employers operate a roster system that helps determine public holiday entitlement. If the roster naturally rotates to include the public holiday, it is considered an otherwise working day, entitling employees to public holiday benefits. Conversely, if the roster results in the public holiday being a rostered day off, it is not an otherwise working day.
Additionally, employment agreements must be reviewed to meet any specified entitlements regarding working days and times.
Employers cannot manipulate the roster to deny an employee their public holiday entitlement.
If uncertainty arises due to an employee’s work pattern, examining their average pattern over the previous four weeks can provide clarity.
Calculating Payments for Public Holidays
Once it’s determined whether the day is an otherwise working day, the next step is deciding the payment.
For Employees Who Have the Day Off:
– If the day is an otherwise working day, the employee receives payment for the day off.
– If the day is not an otherwise working day, they have the day off but do not receive payment.
For Employees Who Work:
– If the day is an otherwise working day, they receive time-and-a-half payment and an alternative holiday (day in lieu).
– If the day is not an otherwise working day, they receive time-and-a-half payment but do not get an alternative holiday.
Considerations for Casual Staff
Casual employees typically lack regular working days as their employment is based on need. Therefore, casuals receive time-and-a-half payment for working on a public holiday. However, if they have consistently worked on that day, they must receive time-and-a-half payment and an alternative holiday.
Insisting on Employee Work on Public Holidays
While employees may choose to work on a public holiday, employers can only mandate it if the employment agreement explicitly states so and the public holiday is an otherwise working day for the employee.
Leave on Public Holidays
If an employee is on leave, such as annual leave, on a public holiday, they are paid for the public holiday instead of using their annual leave entitlement, regardless of whether the business is open and they have requested the day off.
Sick Leave on Public Holidays
If an employee is scheduled to work on a public holiday but falls sick or experiences bereavement, they are eligible for paid unworked public holiday leave. The employee receives their relevant daily pay or average daily pay but is not entitled to time-and-a-half or an alternative holiday. Sick or bereavement leave is not deducted.
Transferring Public Holidays
Agreement between employers and employees can lead to the transfer of public holidays. Often, employees request transferring a Tuesday, Wednesday, or Thursday public holiday to a Monday or Friday for an extended weekend.
If agreed upon, the public holiday is moved, and the employee receives payment for the day off (e.g., Monday). The following Tuesday becomes a regular working day, with normal payment and no alternative holiday. This arrangement must be documented and mutually agreed upon. Employers can decline transfer requests if it aims to reduce entitlements, and they cannot impose a transfer on employees.
Taking Alternative Days (Days in Lieu)
The timing of alternative days taken is at the discretion of the employer and employee. Similar to other types of leave, it is advisable to allow employees to take the day off when requested, unless a valid reason prevents accommodation.
Employees are paid for alternative days as if they were regular working days.
Pay-Outs
If an employee fails to take their alternative day within 12 months of entitlement, the employer and employee can agree to a pay-out instead.
Stand-Down or Qualifying Periods
There are no stand-down or qualifying periods before employees become eligible for public holiday entitlements. Employees are entitled to public holidays from their first day of work.
Restricted Trading Days
Under the Shop Trading Hours Act 1990, the majority of shops must be closed on the following days:
– Christmas Day (a public holiday)
– Good Friday (a public holiday)
– Easter Sunday (not a public holiday)
– ANZAC Day (until 1.00 pm on April 25, a public holiday)
Most shops must close on these days, unless they have exclusions based on the nature of their trade (e.g., petrol stations, cafes) or area exemptions prescribed by local Council bylaws.
Payment for Employees
If shop trading restrictions prevent offering employees their usual working hours, employers must still pay them for the minimum contractual hours in the relevant pay period.
To fulfill this obligation, employers must either:
– Make additional hours available within the pay period, enabling employees to work their contractual hours.
– Pay employees in lieu of working, demonstrating good faith.
If these options are not feasible, negotiating reduced working hours during affected pay periods may be possible. This consultation with employees should occur well in advance of the public holidays.
If you have specific or unusual scenarios or require further clarification, it is advisable to consult an expert. The team at MyHR is available to assist you in ensuring compliance with these regulations.
Find out more about handling annual business closedowns.
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