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Alternative Holidays

  • An Alternative Holiday is a term introduced by Section 56 to Section 61 of the Holidays Act 2003 and refers to a day an employee is entitled to take off as paid leave, in return for having worked on a public holiday.
  • The creation of an entitlement to an Alternative Holiday is described in Public Holiday Worked.
  • The entitlement to an alternative holiday remains in force until the employee has either taken the holiday, or been paid for not taking it.
  • Payment for an Alternative Holiday is based on the relevant daily pay of the employee, for the day on which the alternative holiday is taken.
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I have a staff member who earned an alternative holiday working on a public holiday that fell on a Monday. Normally on a Monday they work from 8am - 12noon. She wishes to use this alternative holiday on a Friday. Also a day where she works from 8am -12 noon. If she uses this alternative holiday on a Friday does she use half of it or all of it. Also, if she uses it on a Tuesday when she normally works 8am - 5pm, does she use all of it. I really hope this makes sense.

  • Under the Holidays Act 2003 there is no such thing as a fractional alternative holiday.
  • There are some things in life you can either use, not use, but cannot half use. An Alternative Public Holiday is one of them. A voucher for a bungy jump is another.
  • The purpose of the law is to allow an entitlement to 11 public holiday days, as set out in section 43.
Section 43
Purpose of this subpart

The purpose of this subpart is

(a) to provide employees with an entitlement to 11 public holidays if the holidays fall on days that would otherwise be working days for the employee:

(b) to enable employees to agree to work on a public holiday in exchange for another day's paid leave.


  • If the employee works on a public holiday, then Section 56 requires you to provide an Alternative Holiday, to replace the day they could not take, because they worked on it.
  • An Alternative Holiday is, in effect, a substituted Public Holiday.
  • When the day is ultimately taken, Section 60 requires you to pay the employee their normal wages for the day taken.
  • Put another way, an Alternative Holiday arises because the employee had to work on a day that for them, would have been a Public Holiday.
  • In return for that, you have given them entitlement to a different Public Holiday of their choice - the Alternative Holiday.
  • When it is taken, the employee is paid in exactly the same way they would be if the Alternative Holiday day chosen by the employee was a Public Holiday, and they did not work.
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What is the basis of payment for an alternative holiday?

When an Alternative Holiday is taken, it must be paid for as provided by Section 60.

Section 60
Payment for alternative holiday

(1) An employer must pay an employee not less than the employee's relevant daily pay for the day which is taken as the alternative holiday.

(2) Payment for an alternative holiday must be made

(a) in the pay that relates to the pay period in which the alternative holiday is taken; or

(b) if the employee has not taken the alternative holiday before the date on which his or her employment ends

(i) at the rate of the employee's relevant daily pay for his or her last day of employment; and

(ii) in the pay that relates to the employee's final period of employment.

Relevant Daily Pay is a term defined by Section 9 of the Act, and "means the amount of pay that the employee would have received had the employee worked on the day concerned"

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The new Holidays Act states that after 12 months you can replace an alternative day with a payment. How is this payment amount calculated?

  • If a public holiday falls on a day that would otherwise be a working day for an employee, and the employee works on any part of that day, the employee must be paid time and a half for the time worked on the public holiday, and be provided with an alternative paid holiday. (Section 56)
  • This day can be taken during the next twelve months at the request of the employee (Section 57) and after twelve months at the insistence of the employer (Section 58)
  • If not taken by the employee, it must be paid out on termination (Section 60)
  • After twelve months the employee can request the day be exchanged for payment. You are asking how that payment is calculated.
  • Let's look at Section 61 of the legislation. We added the bold underlines - they are not part of the legislation.
Section 61
Alternative holiday may be exchanged for payment

(1) An employee may request the employer to exchange the employee's entitlement to an alternative holiday for a payment.

(2) A request under subsection (1)

(a) may be made only if 12 months have passed since the employee's entitlement to the alternative holiday arose; and

(b) may be made whether or not the employee has been required to take the alternative holiday under section 58 (employer insists on taking).

(3) If the employer agrees to the employee's request, the employer must pay the employee the amount agreed between the employer and the employee in exchange for the alternative holiday.

(4) The employer must make the payment for the alternative holiday as soon as practicable after the employer has agreed under subsection (3).

  • Note the employer cannot "replace" the day with a payment - it is up to the employee to request it.
  • Once requested, the payment is entirely open to negotiation, and could have been agreed to in advance in a written employment agreement.
  • A good starting point for negotiation is an employee's usual daily pay.
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If an employee does not normally work on the day that the Public Holiday falls but works the Public Holiday are they entitled to an alternative holiday?

In this situation, the employee must be paid time and a half for the time worked on the Public Holiday, but is not entitled to an alternative holiday.

This is set out in Section 48(1)(b) which we repeat here for clarity:

(1) If a public holiday falls on a day that would not otherwise be a working day for an employee, section 46 (entitlement to public holidays) is complied with if

(a) the employee does not work on the day; or

(b) the employee works on any part of the day and the employer pays the employee in accordance with section 50 (time and a half for time worked).

Think of it this way. The employee has not "lost" their paid public holiday, because they did not have it to begin with. Because they have not lost their paid public holiday, you are not required to give them an alternative paid holiday to replace it.

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
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Public Holiday Calendar
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Payment For Sick Leave If Taken On A Public Holiday
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Alphabetical Index
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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
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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
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Holiday 52 Week History
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Holiday Pay - Daily Rates
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Leave Calendar
Use the leave calendar to record actual dates taken for leave more..
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Changing Holiday From 8% Each Pay
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Alphabetical Index
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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..
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All the most common Ace Payroll questions grouped by categories in a short table of key words more..
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