Posted on: Dec 08, 2016

This year the recognised Public Holidays over the Christmas and New Year period are as follows:

  • Sunday 25th December 2015 – Christmas Day (observed on Tuesday 27th)
  • Monday 26th December – Boxing Day
  • Sunday 1st January 2016 – New Year’s Day (observed on Tuesday 3rd)
  • Monday 2nd January – the day after New Year’s Day

Actual day or observance day?

Just one of the many complexities of Holidays Act is that public holidays can actually fall on different days for employees who have different work schedules.  If you’re confused about what day is considered the public holiday day for a particular employee, the following guidelines should help:

  • If the employee would normally work on a Sunday, then the actual days of 25 December and 1 January would be their public holidays.
  • If the employee would not normally work on a Sunday but would normally work on a Tuesday, then the  Tuesdays (27th December and 3rd January) would become their public holidays.
  • If the employee would normally work on both Sunday and Tuesday, then the public holidays are recognised on the calendar dates (25 December and 1 January).

Public Holidays during Closedown

Entitlements to public holidays that fall during a closedown period are clarified in the Holidays Amendment Act 2010.

If a business has a closedown period that includes public holidays (as can occur over the Christmas and New Year period) then the employee is entitled to paid public holidays if they would otherwise be working days for them, as if the closedown was not in effect.

Just as if a public holiday falls during a period of annual holidays, the employee is entitled to a paid public holiday if it is otherwise a working day for them.

Don’t forget that if you’re going to closedown your business during the Christmas and New Year period, you need to provide at least 14 days notice of the closedown, in accordance with section 32 of the Holidays Act 2003.  It’s important to check your employment agreements however, as longer notice may be contractually required.

For more information on this topic check our blog for the Annual Closedowns article we have previously posted.

Payment for Public Holidays

If the employee works on a Public Holiday

Where an employee works on any part of a public holiday the employee will need to be paid time and a half for the actual hours worked (less any penal rates), or paid the employee’s relevant daily pay that relates to the time actually worked (including any penal rates), whichever is greater.

In addition, if the employee works on a public holiday and that day would be the employee’s normal day of work, then the employee is also entitled to an alternative holiday (which will be paid, when taken, at the employee’s relevant daily pay or average daily pay – whichever is greater).  Note that the employee is entitled to a whole alternative day’s holiday, regardless of how many hours they actually work on the public holiday.

If the employee does not work on a Public Holiday

Where the employee does not work on a public holiday and the employee was due to work that day (i.e. an ‘otherwise working day’) then the employee is entitled to be paid not less than the employee’s relevant daily pay or average daily pay for that day, but the employee is not entitled to an alternative holiday.

If the employee does not work on a public holiday and the employee was not due to work that day, (i.e. not an ‘otherwise working day’) then the employee is not entitled to any payment for that day and the employee is not entitled to an alternative holiday.

Relevant Daily Pay

To calculate the employee’s pay entitlements for public holidays, alternative holidays, bereavement leave and sick leave, relevant daily pay (RDP) is used as the default calculation.

For RDP, the employer needs to pay what the employee would have received had the employee worked on the day concerned, including payments for any overtime and any commission and productivity based pay.  Employer contributions to a Superannuation scheme are excluded.

Payroll systems are not great at making this sort of calculation, as it generally requires an element of human judgement as to what the employee would have received had they worked.  You need to consider how many hours your employee would have worked if it wasn’t for the public holiday (would they have likely done overtime), and what additional payments would they have received that should be included.  It would also pay to check that your payroll system is not defaulting to a “four week look back” calculation for RDP. The Holidays Act previously provided 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 RDP calculations (to avoid confusion, there is still a four week look back calculation available for determining ordinary weekly pay when making a payment for annual leave).

If it’s not practicable or possible to determine RDP, or if the pay for the employee varies within the pay period, the employer must use the “average daily pay” calculation below.

Average Daily Pay

To calculate average daily pay, take the gross earnings for the previous 52 weeks divided by the number of days for which the employee was paid during that period.



Disclaimer

This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.