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08 Dec 2016
The holidays are coming so here’s a reminder of the rules regarding annual leave entitlements and public holidays.
By law, employees are entitled to a minimum 4 weeks paid annual leave after completion of 12 months continuous employment. The number of days leave this represents will depend on the employee’s work pattern. For permanent employees with a constant work pattern, the calculation is straight forward. e.g. if work 2 days per week, leave entitlement is 8 days. If the work pattern varies from week to week, the calculation is more complicated. For those on a roster (e.g. 4 days on, 4 days off), a “week” will depend on the days the employee would have been working in the week they want to take holidays. If the work pattern is unpredictable, a “week” is determined by averaging days/hours over a number of prior weeks.
The holiday pay rate is calculated at the time the leave is taken. It is the higher of the employee’s ordinary weekly pay at the beginning of the holiday, or their average weekly earnings for the 12 months immediately prior to taking the holiday.
Subject to their employment agreement, casual workers, who work irregularly with no ongoing employment expectations, can be paid their holiday pay with their wages as they go (normally calculated as an additional 8% on the taxable pay and must be identified separately on payslip.) There is therefore no further leave entitlement.
Some businesses have an annual closedown, and subject to 14 days notice being given, employees may be required to take any annual leave entitlement during this time.
If the employer agrees, an employee may take leave in advance of their annual anniversary entitlement. (Just watch that it doesn’t exceed the payment they would receive if terminating.)
An employee can make a written request to cash up a maximum of one week of their four week entitlement after completion of 12 months employment. An employer can refuse the request. Any additional annual leave entitlement in excess of the minimum 4 weeks per annum can also be included in the request (e.g. 5 weeks leave entitlement annually, can cash up 2.)
The general rule for public holidays is that an employee is entitled to a paid day off on a public holiday, if it would otherwise be a working day for that employee.
If the public holiday would otherwise be a working day and the employee does not work at all on the day, he is entitled to be paid as if it were a normal working day. The amount paid includes any overtime, productivity or incentive payments and cash value of board and lodgings. If it is too difficult to calculate this amount called Relevant Daily Pay (RDP), there is a provision to use average daily pay (ADP), being the employee’s gross earnings over the last 52 weeks divided by the number of whole or part days paid.
If an employee works any time on a public holiday, he is entitled to a minimum of time and a half for the actual time worked. If it would otherwise be a working day for the employee, he is also granted an alternative day’s leave on full pay, at a later date. This means a shift or on-call worker who works only a small part of the day, may be entitled to a full day off. If an employee is only employed to work public holidays, there is no entitlement to an alternative holiday.
If a public holiday falls when an employee is on annual, bereavement or sick leave, the day is treated as a paid unworked public holiday with no deduction for that day from leave entitlement.
Public holidays can occur on a different day to the event date. For example - a seven day operation may have staff working on Christmas Day (Sunday 25th December), and the official public holidays of the Monday and the Tuesday. If an employee normally works the Sunday, and does work Christmas Day and Boxing Day, they would be regarded as public holidays for entitlement purposes. Thus some staff may have Sunday and Monday as public holidays and some may have the Monday and Tuesday. No employee may have more than one day treated as the same public holiday. i.e. An employee working Sunday to Tuesday inclusive only gets two days treated as public holidays not three.
The provisions of an employment agreement override the legal minimums, if they are more favorable to the employee.
Employment relations is a complex area and this is only a brief summary of entitlements. For further information refer to the Ministry of Business, Innovation & Employment website. www.dol.govt.nz/er/index.asp or contact your accountant.
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