Your hol­i­day pay en­ti­tle­ments


if­fer­ent rules ap­ply for dif­fer­ent em­ploy­ees when it comes to an­nual leave. Per­ma­nent em­ploy­ees who have worked for 12 months or more have a min­i­mum en­ti­tle­ment to paid leave equal to four weeks.

The amount paid for a week’s leave is the greater of ei­ther the or­di­nary weekly pay for that em­ployee or the av­er­age weekly pay across the last year for that em­ployee.

That means if an em­ployee started work on $30,000 in Jan­uary, and had an in­crease in pay in De­cem­ber to $40,000, and then took a hol­i­day the fol­low­ing Jan­uary, she would be paid at the higher rate of pay when on an­nual leave (even though she ac­crued most of her en­ti­tle­ment in the year when her salary was $10,000 less).

Sim­i­larly, if an em­ployee worked from Jan­uary un­til Au­gust as a full­time em­ployee, and then you agreed she could work part- time, if she took a week’s leave in Septem­ber her week on an­nual leave would be paid at a rate which was equal to her av­er­age weekly pay from the last year (even though that is a lot higher than what she would have re­ceived if she had been at work). If em­ploy­ment ends be­fore an em­ployee has com­pleted 12 months’ ser­vice (and they there­fore have not yet earned the right to four weeks), they are en­ti­tled to a pay­ment equal to 8 per cent of gross earn­ings dur­ing em­ploy­ment.

Gross earn­ings in­cludes any pay­ments the em­ployer has ever made to the em­ployee, so in­cludes over­time, al­lowances, com­mis­sions and so on. For ca­sual or part-time per­ma­nent work­ers, the em­ployer and the em­ployee need to agree on what an av­er­age work­ing week is.

For ex­am­ple, if a per­son works 10 hours a week, they will be en­ti­tled to four weeks of 10 hours, or 40 hours of hol­i­day pay.

A part- time worker’s en­ti­tle­ment is also to four weeks of an­nual hol­i­days af­ter 12 months of ser­vice.

The part-time worker would be paid the greater of ei­ther the hours they would nor­mally work dur­ing those four weeks or a larger amount if the av­er­age weekly pay­ment over the last year was greater.

If rosters vary, it will ob­vi­ously be con­cern­ing to em­ploy­ers if em­ploy­ees take leave only in weeks where their av­er­age hours are high.

To min­imise any is­sues around this, em­ploy­ers might en­force ‘‘close-down pe­ri­ods’’ or re­quire leave to be taken at cer­tain times as part of their em­ploy­ment poli­cies. For some ca­sual or short fixedterm work­ers, there is the op­tion of be­ing able to be paid the 8 per cent of their gross earn­ings each pay if it is too dif­fi­cult to pay them oth­er­wise.

If that is the agree­ment then you must separately iden­tify the 8 per cent hol­i­day pay in each pay.

Em­ploy­ees paid on this method are not en­ti­tled to paid time off for an­nual hol­i­days.

The dif­fi­culty with this is that in some jobs, work­ers are clas­si­fied as ‘‘ca­sual’’ when, in fact, they have regular pat­terns of work and are ac­tu­ally part-time per­ma­nent work­ers (for ex­am­ple, su­per­mar­ket work­ers or those in hos­pi­tal­ity).

If work­ers are per­ma­nent part­time em­ploy­ees, they are en­ti­tled to four weeks’ leave af­ter 12 months’ ser­vice.

If you use the pay-as-you-go method when not en­ti­tled to, or fail to com­ply with all re­quire­ments, then you will be li­able to pay the an­nual hol­i­days en­ti­tle­ment again, even if you have al­ready paid the 8 per cent each week. The leave en­ti­tle­ments dis­cussed above are those set as min­i­mum en­ti­tle­ments un­der statute.

Em­ploy­ers and em­ploy­ees are also free to ne­go­ti­ate bet­ter terms for em­ploy­ees, such as ex­tra an­nual leave over the four weeks.

Em­ploy­ers must pro­vide the greater of the min­i­mum legal en­ti­tle­ment (four weeks) or what is in the em­ploy­ment agree­ment.

Col­umn cour­tesy of Rainey Collins Lawyers, phone 0800 733484. If you have a legal in­quiry you would like dis­cussed in this col­umn email aknowsley@ rain­ey­

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