image

Holiday Pay FAQ's from the Employment Relations Service

Annual Leave Issues


image

My employer is closing down the business for a few weeks. What happens with my annual leave and holiday pay? I've been employed for nine months.

Given that you have been employed for less than a year at the time of the shutdown, the Holidays Act 2003 provides that you can have the time off and receive a sum equating to 8% of your total gross earnings thus far as your holiday pay. The shutdown date then becomes your new anniversary date for the purposes of your next 4-week physical annual leave entitlement.

image

I have resigned my job and leave next week. Do I get holiday pay for the leave I have accumulated? I've been employed for less than one year.

The Holidays Act 2003 provides that you can receive a sum equating to 8% of your total gross earnings thus far as your holiday pay.

image

My employee has worked more than a full year with me. I understand they have four weeks leave, but how do I calculate their holiday pay?

Under the Holidays Act 2003 an employer is required to calculate and compare two figures.

The first figure is quite simply the employee's ordinary weekly pay, the ordinary number of hours multiplied by the ordinary rate of pay.

The second figure is the average weekly earnings. This is derived by taking the total gross earnings in the first continuous 12-month period of employment and dividing these by 52. The figure will include all salary, wages, overtime pay, allowances, commission, and any previous holiday pay paid.

Your employee is entitled to receive the higher of the two figures for each week of annual leave taken.

image

My employees are paid on a retainer plus commission basis. I'm at a loss as to what to pay them for their statutory or public holidays. For that matter I'm not even sure how to pay them for their two weeks annual leave that they'll be taking. Please advise.

To calculate their pay for annual leave, you will need to calculate two figures. First, their ordinary weekly pay (the retainer amount), and then their average weekly earnings, this time including their commission. The higher of the two figures is paid to the employee for each week of leave taken.

Concerning public holidays, it is really a matter of how the commissions are earned and paid. The Courts have clarified that what is payable for a public holiday is essentially what is paid for an ordinary working day. That figure will include anything that is payable in defined circumstances or at defined times.

What you need to consider then is how regular or predictable the commission payments actually are. If they are so irregular that you couldn't say with certainty that they are ordinary payments, then they would probably not be included in the calculation. Each situation rests on it's own circumstances.

image

Our employer is advising that we will have to take two weeks annual leave because there's not much work on and she wants to have the offices renovated. Can she do this?

Yes. Your employer is in fact entitled to do this under the provisions of the Holidays Act 2003 if

  • you have been employed for at least a continuous 12 month period and therefore currently have an entitlement to all or part of your 4 week physical annual leave entitlement, and
  • your employer gives you at least 7 days notice under the Act.
image

An employee in my company wishes to take two weeks leave. They haven't been with me for long, only a matter of months, in fact. Are they entitled to take paid leave? I've heard that employees can accrue leave on a month by month basis. Is this the case?

No. Under the terms of the Holidays Act 2003 an employee has no actual leave until they have worked a continuous 12-month period with the same employer. So, although some employers agree to leave accruing on a monthly basis, the Act actually deems this to be leave in advance.

As an employer you do not have to grant leave in advance. But, if you do, the Act stipulates that for each week of leave taken in advance, the employee will receive the greater of their ordinary weekly pay or an amount equivalent to 2% of their total gross earnings to date.

image

My fellow employees have all been granted their leave. I on the other hand have had it denied, even though I'm entitled to it. So, I have to work. What can I do about it?

In a general sense, the taking of annual leave is open to agreement between employer and employee. Your employer is not compelled to grant any employee leave on request at any particular time whether the have become entitled to it or not.

Under the Holidays Act 2003 an employer is obliged to consider the opportunity for an employee to take time off for rest and recreation. This also has to be considered in the light of genuine business requirements. You may need to check to see if there are policies in your workplace relating to applying for and taking annual leave. If ultimately you feel you are being treated unfairly you may be able to challenge your employer through the personal grievance procedure.

image

My employer agreed to grant me annual leave and now he has gone back on his word. I've got family commitments and travel plans. Can he do this to me?

Probably not. Once an employer and employee have agreed on when leave will be taken it would be legally binding. So, any subsequent change or variation would naturally be subject to further agreement between the parties.

Sometimes, however, there may be genuine reasons based on operational requirements for leave to be denied once agreed. But your employer must justify this and furthermore must negotiate with you as to whether any alternative options might be available. If you feel you have been disadvantaged you have the right to challenge your employer's decision by way of the personal grievance procedure.

Public Holiday Issues


image

How long does an employee have to work before they become entitled to a public holiday?

There is no entitlement period. The Holidays Act 2003 states solely, that to be entitled to a paid day off on a public holiday, that day must have fallen on a day that would otherwise have been a day of work for the employee concerned.

image

My employees are claiming payment for public holidays, but we have never throughout the history of the company been open on public holidays. We always shut up shop. Surely they don't have to be paid!

You need to consider the following scenario: "Had it not been a public holiday on that particular day, would it have been a day of work for the employees concerned?" If you are closed solely because it is a public holiday, then your employees are entitled to a paid day off.

image

I have an employee who typically works Tuesday to Saturday. They are claiming entitlements to a public holiday that falls on a Monday. I don't believe that's the case. Can you please confirm this?

Based on what you are saying, you are correct.

Under the Holidays Act 2003 an employee will be entitled to a paid day off on a public holiday on the condition that the public holiday falls on a day that would otherwise be a day of work for them. So, given that Christmas Day this year falls on a day that your employee normally has off (i.e. a Monday), there is no payment.

image

I work part time five hours a day, five days a week, except on a Monday when I normally work seven hours. My employer has said that he will pay me for a public holiday that falls on a Monday at a daily average of what I earn per week. Is this correct?

No. The Courts have clearly shown that what is payable for a public holiday must equate to the amount that would be paid for working that particular day as if it were not a public holiday, but an ordinary working day. If you normally work 7 hours on the day that the public holiday falls then you have the day off and the employer should pay you for 7 hours.

image

I've worked for my company for a while now, but nothing has ever been put in writing. My employer is saying that because we are so busy I will be required to work on public holidays. Is he entitled to do this?

No. Under the provisions of the Holidays Act 2003 the law provides that in the first instance an employee is entitled to enjoy a paid day off on the day a public holiday falls. The Act does allow an employer and employee to agree to make other arrangements in a written employment contract or written employment agreement or by some other form of agreement. The emphasis however is on agreement and it is for this that an employer can not force an employee to work on a public holiday if they have never agreed to do so.

image

I am classed as a casual employee. I don't have set hours, in fact they vary greatly. I do, however, work every Monday. I'm unsure as to whether I'm entitled to be paid for a public holiday that falls on a Monday. If so, what do I get?

The provisions of the Holidays Act 2003 apply to all employees regardless of whether they are full-time, part-time or casual. You are entitled to a public holiday and therefore to a paid day off should the public holiday fall on a day that would otherwise be a day of work for you.

In terms of payment you are entitled to be paid what would constitute an ordinary day's pay. In situations where hours vary it is a matter for employer and employee to agree on a rate. Where there is no agreement a Labour Inspector may decide what should be paid.

image

I have two employees who are having time off. They've actually used all their annual leave, but I've granted them leave without pay. They are now questioning me as to whether I should pay them for the public holidays that fall during their leave without pay. What's the story?

The law provides that entitlement to a paid day off rests on the public holiday falling on what would have been a day they would normally work. If an employee is already on unpaid leave, then it is not considered to be a day that they would otherwise work. It follows then that your employees would not be entitled to be paid the statutory days either.

image

I usually work on a Monday, so I have agreed to work on Easter Monday this year. Should my employer pay me double time?

No. While some employers might pay double time to their staff who work on Christmas Day, no employer is obliged to pay at any more than your agreed rate of pay for a day. Whatever you're paid for work done on the day is usually a matter for agreement between you and your employer.

However, your employer must provide you with a paid day in lieu, that is, to a paid day off at some other time.

image

I have an employee who is leaving the first week of April. He is claiming the statutory days at Easter? Do I have to pay him, and if so why?

Possibly. There are two considerations here.

First, there is a provision in the Holidays Act 2003 that applies to factory workers whose employment is terminating within a fortnight ending on a public holiday. Under the Act a factory worker will receive their full entitlement to any public holidays where termination has occurred within the 14 days preceding that public holiday. Where the worker is moving to another factory both employers share the obligation of payment. This is based on the tenths rule. You count back 14 days from the day the public holiday falls. From this point one counts forward the days worked by the worker for the former employer. The former employer must pay 1/10th for those days and the new employer pays the balance. This provision applies only to factory workers.

Second, there is an entitlement only when

  • the employment is to be terminated; and
  • the balance of the employee's unused annual leave when added to the date of termination incorporates one or more public holidays.

This has been clarified in case law.

So, if he has unused leave, and then when you add this to his effective date of resignation, it now includes the Christmas/New Year public holidays and these days would have been days he would normally have worked had he not been leaving, then he is entitled to these days in addition to his holiday pay.

image

My employees have agreed to work on a public holiday. I don't want them to accrue too much time off so I've agreed to give them double time on the condition that they forfeit their day in lieu. Is this an acceptable arrangement?

No. Under the Holidays Act 2003 you are free to agree on what will be paid to employees for working on a public holiday when otherwise they would have had that day off on pay.

But, bear in mind that the Act expressly states that an employee is to be provided with a paid day off. If they don't have it on the day itself because they have agreed to work then they must have it at some other time. The Courts have shown that an employer cannot contract out of the legislative obligation of providing a paid day off by providing greater rates of pay. You will have to at least provide them a day in lieu.

The frequently asked questions in this section are written by the Employment Relations Service and are designed to help employees and employers with common questions about leave issues.

They advise you exercise special caution in using this information. The FAQs are mostly framed around the minimum rights in legislation, whereas a number of holiday related questions are aimed at what might be in an employment contract or employment agreement.

They have also tried to use as simple language as possible, given the very technical nature of some of the issues addressed. So, please exercise caution in using these responses supplied. You should always read your employment contract or employment agreement first.

If in doubt, contact the Employment Relations InfoLine on 0800 800 863 for further information.

More on public holidays

Public Holiday Entitlements
Ace Payroll receives many calls immediately after every public holiday, asking whether a particular employee is entitled to be paid for the public holiday more..
Public Holiday Taken
Use this method for an employee who did not work on the public holiday, but would have worked had the day not been a public holiday more..
Public Holiday Worked
Use this method for an employee who works at any time on a public holiday more..
Public Holiday Calendar
A facility in Ace Payroll to check when public holidays fall in this and future years more..
Christmas and New Year 2016/2017
Working out public holiday entitlements during the 2016/2017 Christmas and New Year holiday period more..
Easter Sunday
Easter Sunday is not a public holiday, but shops cannot open more..
Easter Holidays 2016
The dates of Good Friday and Easter Monday this year more..
Waitangi Day
Waitangi Day commemorates the signing of a treaty at Waitangi on 6 February 1840 more..
Anzac Day
Anzac Day is held on 25 April each year to commemorate New Zealanders killed in war more..
Queen's Birthday
The Queen's Birthday is always observed in New Zealand on the first Monday in June more..
Labour Day
Labour Day is always observed on the 4th Monday in October more..
Southland Anniversary Day
Southland Anniversary Day is always on Easter Tuesday more..
Default Provincial Anniversary Day
Select the provincial anniversary day observed by the majority of your employees to make it the default more..
Payment For Sick Leave If Taken On A Public Holiday
You are not required to pay your staff time and a half if they call in sick on a public holiday they would have otherwise worked more..
Alphabetical Index
The Ace Payroll alphabetical index provides links to all documentation more..
Ace Payroll FAQ Contents
All the most common Ace Payroll questions grouped by categories in a short table of key words more..
Ace Payroll Frequently Asked Questions
All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more..

More on holiday pays

Cashing Up Holiday Pay
From 1st April 2011 it is legal for an employee to cash up to one weeks annual leave each year more..
Understanding Termination Accruals
Handling of accrued holiday pay upon termination can be confusing. Ace Payroll explains the concept of accruals and demonstrates how termination pay is calculated more..
Holiday 52 Week History
It is not absolutely necessary to enter a full 52 week earnings history for correct holiday pay calculation more..
Holiday Pay - Daily Rates
An explanation of the calculation of a daily rate for an employee taking holidays after a full years service more..
Leave Calendar
Use the leave calendar to record actual dates taken for leave more..
Employee Leave Profile
The employee leave profile records which are the normal days worked by an employee more..
Casual Holiday Each Pay
This tutorial shows how to have Ace Payroll automatically pay a casual employee 8% holiday pay every time they are paid more..
Taxation of Holiday Pay
This article shows how easy it is to tax holiday pay according to IRD requirements more..
Annual Compulsory Closedowns
An annual compulsory closedown is where a business traditionally closes down for a number of weeks each year, usually over Christmas more..
Changing Holiday From 8% Each Pay
The procedure for changing a casual employee over to being a permanent employee in Ace Payroll for holiday pay purposes more..
Termination Holiday 8% Part Year Payment
How to pay the 8% of part year gross for an employee who has been employed for more than a year, receives four weeks holidays a year, and is terminating their employment more..
ERS Holiday Pay FAQ's
A selection of holiday pay FAQ's from the Employment Relations Service more..
Holidays 4 to 5 Weeks
How to manually change an employee from 4 to 5 weeks annual leave more..
Holiday Pay Miscellaneous
The reason why only full days holiday pay owing is shown on payslips rather than fractional days more..
Alphabetical Index
The Ace Payroll alphabetical index provides links to all documentation more..
Ace Payroll FAQ Contents
All the most common Ace Payroll questions grouped by categories in a short table of key words more..
Ace Payroll Frequently Asked Questions
All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more..

Other leave sections

Public Holiday Entitlements
Ace Payroll receives many calls immediately after every public holiday, asking whether a particular employee is entitled to be paid for the public holiday more..
Public Holiday Taken
Use this method for an employee who did not work on the public holiday, but would have worked had the day not been a public holiday more..
Public Holiday Worked
Use this method for an employee who works at any time on a public holiday more..
Alternative Holidays
An Alternative Holiday is a day an employee is entitled to take off as paid leave, in return for having worked on a public holiday more..
Annual Holiday Entitlements
This article looks at entitlements to holidays as provided for by the Holidays Act more..
Annual Holiday Payments
This tutorial shows how to record holiday pay taken using the Annual Leave method more..
Sick Leave
Entitlements to sick leave as provided for by the Holidays Act more..
Bereavement Leave
Entitlements to bereavement leave as provided for by the Holidays Act more..
Time Bank
The time bank feature allows for the accumulation of hourly leave outside the legal requirements of the Holidays Act more..
Irregular Work Pattern
In this article we look at the calculation of Relevant Daily Pay for an employee that works irregular hours more..
Leave Owing Report
The Leave Owing report provides an estimate of holiday pay owing to all staff at a selected date more..
Holidays Act 2003
The full text of the Holidays Act 2003 more..
Alphabetical Index
The Ace Payroll alphabetical index provides links to all documentation more..
Ace Payroll FAQ Contents
All the most common Ace Payroll questions grouped by categories in a short table of key words more..
Ace Payroll Frequently Asked Questions
All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more..