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Relevant Daily Pay - Irregular Work Pattern
- In this article we look at the calculation of Relevant Daily Pay for an employee that works irregular hours.
- Relevant Daily Pay is a term defined by Section 9 of the Holidays Act 2003 and is used for calculating payment for sick, bereavement, public holidays taken, and alternative holidays taken.
- Relevant Daily Pay is not used to calculate holiday pay.
Legislation
Section 9(3) specifically provides for employees that have an irregular work pattern. We highlight it below.
| Section 9 Meaning of relevant daily pay (1) In this Act, unless the context otherwise requires, relevant daily pay, for the purposes of calculating payment for a public holiday, alternative holiday, sick leave, or bereavement leave,
(2) To avoid doubt, if subsection (1)(a) is to be applied in the case of a public holiday, the amount of pay does not include any amount that would be added by virtue of section 50.
(4) However, an employment agreement may specify a special rate of relevant daily pay for the purpose of calculating payment for a public holiday, alternative holiday, sick leave, or bereavement leave if the rate is equal to, or greater than, what would otherwise be calculated under subsection (1) or subsection (3). |
The purpose of Section 9(3) is to provide an averaging mechanism for employees that work irregular hours.
What it effectively says is that to arrive at a daily rate you
- First calculate the gross earnings in the last 28 days.
- Then divide the gross earnings by the number of calendar days on which the employee was at work.
The result of this calculation becomes the employee's Relevant Daily Pay.
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| The following dialog is shown |
Irregular Work Pattern Dialog
In the dialog shown in Step 2 above note the following
Gross Earnings
- A report of gross earnings in the required 28 days is shown.
- Note the report link next to each payment. Clicking this link itemises the single payment.
Days Worked
- Use the Days Worked spin control to select the number of days the employee was at work during the required period.
Daily Rate Calculation
- The Daily Rate Calculation is updated in response to every change made to the Days Worked spin control.
 | How can I enter a part day for the calculation, such as 19.5? |
- You are required to divide the gross earnings by the number of calendar days on which the employee was at work.
- For every day in the 28 day period, the employee was either at work, or was not at work.
- If the employee worked 19.5 days, then select 20. That is the number of "whole or part days" the employee worked.
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| With the Irregular Work Pattern calculation, what happens in the event of partial days. For example, if the employee has worked 25.5 days, do I divide the gross by 25.5 days, or by 26 days? How can I enter a part day for the calculation, such as 25.5? |
This question was recently asked of us by a client who had been told by their employment lawyer that the gross should be divided by 25.5 days. Our understanding of the legislation is that if an employee works any time on a day, it is counted as one whole day for the Irregular Work Pattern calculation.
The client then contacted the Employment Relations Service for clarification. The question as asked by the client was
| If an employee works an irregular work pattern and has a day off sick, please can you confirm the calculation of their relevant daily pay from the following information: -
Should the RELEVANT DAILY PAY be divisable over 25.5 days or 26 days?? The legislation clearly states in Section 9 (3) b, division 'is the number of whole or part days during which the employee earned those earnings in the 4 calendar weeks, ...' Our company operates the ACE Payroll system for payment of our clients wages and the system only allows for division under IRREGULAR WORK PATTERN in whole days, not part days. Their interpretation of the legislation is that even if a person only works for one hour on a day, it should be counted as a full day for purposes of calculating their RELEVANT DAILY PAY. Could you please clarify what the legislation's intention is and reply in writing to my question? |
The Employment Relations Service then replied back to our client with the following answer
| The Act does not allow for days to be divided into smaller units, therefore if an employee works a part day that is considered to be a whole day for the purposes of the formula for calculating relevant daily pay. Based on the information you have provided in your email, the employee's total gross earnings should be divided by 26 days being the number of whole or part days during which the employee earned those earnings in the 4 calendar weeks before the end of the pay period immediately before the calculation is made. Anne Naganathan |
- When working out the relevant daily pay by using the Irregular Work Pattern, you divide the gross by the number of whole or part days worked during the period.
- While the wording of the Act is possibly not the best, what it is saying is that you count each part or whole day they worked, and the total days worked is the number you divide the gross by.
- You do NOT use a fraction or a decimal when performing the calculation - every day worked counts as one day, regardless of the number of hours worked.
| | Why can't I use the "Irregular Work Pattern" method for holiday pay? |
- The "Irregular Work Pattern" feature documented on this page is written to comply with Section 9(3).
- Section 9 describes the meaning of "Relevant Daily Pay" which is used "for the purposes of calculating payment for a public holiday, alternative holiday, sick leave, or bereavement leave".
- "Relevant Daily Pay" does not apply to holiday pay.
- Holiday Pay is calculated using "Ordinary Weekly Pay" as defined by Section 8.
- You might like to read our article Holiday Pay - Daily Rates which provides more detail about holiday pay calculation.
More on public holidays
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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.. |
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Waitangi Day Waitangi Day commemorates the signing of a treaty at Waitangi on 6 February 1840 more.. |
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Queen's Birthday The Queen's Birthday is always observed in New Zealand on the first Monday in June more.. |
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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.. |
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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
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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.. |
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.. |
| Holiday Pay Miscellaneous The reason why only full days holiday pay owing is shown on payslips rather than fractional days more.. |
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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.. |
| 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.. |
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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.. |