Knowing your rights over holiday pay
On resignation, what do you need to know about holiday pay, annual leave and public holidays?
Some large government departments have been in the news recently for getting their pay wrong.
Holiday pay can be tricky. An often forgotten requirement is to pay for public holidays that fall within untaken annual leave after an employee leaves employment.
On a public holiday, employees for which the day would ‘‘otherwise be a working day’’ are entitled to be paid for their usual hours if they do not work. If an employee works on the public holiday they will receive a day in lieu as well as being paid their usual hourly rate plus half that amount again.
On an employee’s resignation, their entitlement to public holidays does not change. In regards to any days in lieu earned, the employee will be paid the amount they would ordinarily earn on that day with their last pay, as well as any entitlement to holiday pay.
If an employee has outstanding annual leave owing after their final day of employment, the annual leave tacks on to the last day of their employment.
If a public holiday falls within the annual leave at the end of the employment and is ‘‘otherwise a working day’’ for the employee, this must be treated as a public holiday in accordance with the Holidays Act 2003.
For example, an employee was leaving their employment after one year and had taken only one week of their annual leave entitlement of four weeks.
They would be entitled to three weeks’ annual leave, any days in lieu they had owing, as well as holiday pay, which is calculated as 8 per cent of their earnings since the date they became eligible for annual leave – including the value of the owed annual leave and the days in lieu.
The annual leave tacks on to the final day of employment, so if a public holiday fell within this period (which would have been a day they would normally work), then this must be treated as a public holiday and paid accordingly on top of their annual leave.
Calculating whether a day would ‘‘otherwise be a working day’’ can be difficult if the employee has a different working schedule each week.
The following issues should be considered:
What is in the employment agreement.
The employee’s usual work patterns.
The employer’s rosters or other systems or records.
The reasonable expectations of the employer and employee as to whether the employee would work on the day concerned.
Whether the employee works for the employer only when work is available.
Whether, but for the day being a public holiday, an alternative holiday, or a day on which the employee was on sick leave or bereavement leave, the employee would have worked on the day concerned.
Whether it is during a customary closedown period.
Employers need to be careful they get all of their pay calculations right or they could find themselves facing big back pay bills just like some government departments recently. CONTACT DETAILS Column courtesy of Rainey Collins Lawyers, phone 0800 733 484 or raineycollins.co.nz. If you have a legal inquiry, you would like discussed email firstname.lastname@example.org. Our free public seminar on dealing with relationship property issues will be on April 27, 12.15pm till 1.15pm. See our website.
It is important for employees to know where they stand on holiday pay.