Em­ployee hol­i­day en­ti­tle­ments and pay­ments

The Northland Age - - Local News - By Mar­lene Job, PKF Fran­cis Aickin

Hol­i­day en­ti­tle­ments and pay­ments can be con­fus­ing — so here are the ba­sics. By law, all em­ploy­ees are en­ti­tled to a min­i­mum of four weeks paid an­nual leave af­ter 12 months con­tin­u­ous em­ploy­ment. Three weeks leave must be taken as time off work, but em­ploy­ees can cash up the fourth week’s en­ti­tle­ment.

Busi­nesses with an an­nual close­down must give 14 days’ no­tice to em­ploy­ees, who may be re­quired to take an­nual leave dur­ing this time.

The num­ber of ac­tual days the four weeks an­nual leave rep­re­sents de­pends on the em­ploy­ees’ work pat­tern — are they full time, part-time, on a reg­u­lar ros­ter or an ir­reg­u­lar re­liever?

The rate of pay­ment for the an­nual hol­i­day is cal­cu­lated at the time the leave is taken. It must be paid at the higher of: the em­ployee’s or­di­nary weekly pay at the be­gin­ning of the hol­i­day. This is the amount nor­mally paid un­der the em­ploy­ment agree­ment, in­clud­ing reg­u­lar over­time, com­mis­sions/bonuses and the cash value of lodg­ings. If the amount is un­clear it can be cal­cu­lated based on the wages or salary of the four prior weeks. the em­ployee’s av­er­age daily earn­ings of the 12 months be­fore tak­ing the hol­i­day.

In cer­tain cir­cum­stances, em­ploy­ees on fixed-term con­tracts for less than 12 months, or whose work is so ir­reg­u­lar that it is not vi­able to pro­vide four weeks’ an­nual leave, may have a hol­i­day pay “pay as you go” clause in­cluded in their em­ploy­ment con­tracts. This is nor­mally cal­cu­lated as an ad­di­tional 8 per cent of the gross tax­able pay for the pay pe­riod and must be iden­ti­fied separately on the payslip. This negates fur­ther an­nual leave en­ti­tle­ment.

New Zealand has 11 an­nual pub­lic hol­i­days.

If an em­ployee does not work on a pub­lic hol­i­day that falls on an “oth­er­wise work­ing day” they must be paid for that day, as if they had worked on that day. This is cal­cu­lated at the higher of the em­ployee’s rel­e­vant daily pay, or av­er­age daily pay.

If an em­ployee works on a pub­lic hol­i­day that falls on an “oth­er­wise work­ing day” for them, they are en­ti­tled to a min­i­mum of time-and-a-half, based on the ac­tual hours worked, and a full al­ter­na­tive day’s hol­i­day. The al­ter­na­tive hol­i­day should be paid at the higher of the em­ployee’s rel­e­vant daily pay or av­er­age daily pay at the time the em­ployee takes it. If an al­ter­na­tive day’s leave is not taken af­ter 12 months of en­ti­tle­ment it may be cashed up, sub­ject to agree­ment be­tween em­ployer and em­ployee.

Where an em­ployee works on a pub­lic hol­i­day which is not an “oth­er­wise work­ing day”, or is specif­i­cally em­ployed to work only on pub­lic hol­i­days, there is no en­ti­tle­ment to an al­ter­na­tive hol­i­day, but the em­ployee must still be paid at least time­and-a-half their nor­mal rate.

With many busi­nesses open more than five days per week, the ‘Mon­day­i­sa­tion’ of pub­lic hol­i­days can be con­fus­ing over which day is the pub­lic hol­i­day. Re­mem­ber — an em­ployee is not en­ti­tled to more than four pub­lic hol­i­days over Christ­mas and New Year, re­gard­less of their work pat­tern.

De­tailed writ­ten records for hol­i­day and other leave en­ti­tle­ments must be main­tained for at least six years. A more de­tailed ar­ti­cle is on www.pkffa.co.nz and www.dol.govt.nz also has more in­for­ma­tion.

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