Payroll – Entitlements under Public Holidays
Employees have rights under the holidays act relating to public holidays.
- There are 11 public holidays per year in NZ.
- All employees are entitled to paid leave on public holidays, when the public holiday falls on a day that would otherwise be a working day for the employee. Where an employee works on a public holiday that work should be paid at the rate of time and a half (at least).
When negotiating employment agreements, any reference to forms of leave in the agreement do not take away from the minimum statutory entitlements for any leave.
Payment for a unworked public holiday
Determining an employee’s entitlement to payment for unworked public holidays involves working out whether a day is an ‘otherwise working day’ for the employee. An employee is paid for a day off only if that day is an ‘otherwise working day’ for the employee.
In many cases, whether a day would be an ‘otherwise working day’ is clear because the working week or roster is either constant or predictable, and bother the employer and employee understand and agree about whether the employee would have otherwise worked on the day.
For the purpose of public holidays, any amount of time an employee would otherwise have worked means that day must be treated as an otherwise working day for that employee.
RDP or ADP?
Employees must be paid their Relevant Daily Pay (RDP) for unworked public holidays. If they had come to work, what would they have gotten paid for that day. This includes commissions, piece rates, overtime etc.
If RDP cannot be determined due to it not being possible to determine, then Average Daily Pay (ADP) must be used.
ADP is a 12-month average taken from the last pay period back 52 calendar weeks divided by the number of days the period’s gross earnings is based on.
Please note: the ADP calculation is not an hourly one. So, if each day had different hours, each day would be counted as one day in the ADP calculation.
Ensure your employees are getting paid right. If you are not sure, feel free to contact the Ontrack Bookkeeping team for support.
New Zealand’s payroll legislation is one of the most complicated in the world. To understand the calculation of wages, allowances, payroll taxes and processing of the payroll, is essential to running payroll correctly and this training can ease the worry and covers all you need to know.
With a multitude of constant legislative changes, getting it right is not an easy task, but vital for peace of mind and a happy productive team.
We at the Small Business Training Hub (a division of Ontrack Bookkeeping) have the solution.
Payroll Essentials training for business owners kicks off 10 February 2022. Check it out here or contact us if you have any questions.
Information is correct at time of publishing and is of a general nature. Professional advice from your business partners should be sought.