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Holiday Pay - Annual Compulsory Closedowns

  • In this tutorial we look at annual compulsory closedowns. That is, where a business traditionally closes down for a number of weeks each year, usually over Christmas.
  • First we look at the legislation, then proceed to show how Ace Payroll handles the situation.

Legislation

Sections 29 to 35 of the Holidays Act 2003 cover the calculation of holiday pay where work ceases periodically.

The effect of these sections is

  • If an employee has been employed for less than a year, they are to be paid 8% of their accumulated gross earnings.
  • The date of the annual closedown then becomes their new anniversary date. At the closedown the following year, they are entitled to 4 weeks paid holiday.

For an employee who has worked for more than a year, an annual closedown is no problem. You merely pay as many days leave as are owing. In this article we concentrate on employees that start during the year.

For an employee who starts during the year the situation is different. In this case, what you effectively do for holiday pay purposes is exactly what you would do if terminating the employee at the start of the closedown, then use the date of the closedown as the new start date.

The next sections show how this is done in Ace Payroll.

For an employee who starts during the year

Step 1 Set calculation method to Min % of Gross

When the employee starts, go to the Employee Modification screen, ensure the employee has a start date entered, then select Leave then Holiday Pay and ensure the holiday pay calculation method is set to Min % of Gross.





Save changes if any were made, then proceed to pay the employee for the rest of the year in the normal manner. That is all that needs doing until the pay week of the annual closedown.

Step 2 Last pay before annual closedown

Calculate the wages as usual, and include wages for time worked right up to the annual closedown.

Your employee may also be paid at this stage for some public holidays. Because these public holidays occur after the annual closedown, it is a fine point whether their payment attracts holiday pay.

If you want to pay holiday pay on the public holidays, calculate the payment for them before the holiday pay.

To not pay holiday pay on the public holidays, calculate their payment after the holiday pay.

From the pay calculation screen, click holiday pay. From the next screen shown, select Current Employee.

Then the following screen is shown





This is the holiday payment screen for an employee on the 8% of gross method that is continuing their employment.

Check, and if necessary print, the report of holiday pay owing.

Then tick Pay Total Owing.

Note that for a continuing employee you normally enter the number of holiday days being taken, but for the purposes of an annual closedown this is not neccessary, as the payment is more in the nature of a final pay. The number of days is irrelevant.

Step 3 Complete regular pay run

Calculate pays for all employees, and perform all tasks associated with a regular pay run. Then file the payroll.

Step 4 Change calculation method to Annual Leave

After the pays are filed, go to the Employee Modification screen for each employee who started during the year. Select Leave then Holiday Pay.





Change the calculation method to Annual Leave entitlement and check the annual entitlement is correct.

The system now accounts for leave with the emphasis on days rather than dollars.

Scroll down and note the following





Opening Entitlement Date
This has been automatically set to the date of the last pay period. The system knew to do this because you paid all holiday pay owing in step 2.

Opening Entitlement Days Owing
This field says None which is correct.

Full Year Average Daily Rate
This field reports a figure which is inaccurate because the employee has not been employed for a full year. Ignore it for the time being.

In a years time, when the employee is paid at the next annual closedown, enough information will be accumulated for a realistic figure to be used.

First Anniversary Date
This figure correctly sets itself to a year from the last pay period. That is, around the time of next years annual closedown.

Click GO to save changes, and the job is done.

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..