The Holidays Act 2003 has been around a while now, but many New Zealand employers still struggle to get public holiday pay right.
The Act is complex (thankfully, it has been reviewed and changes are coming), but every employer needs to correctly calculate, and pay public holidays. Not only is it an essential part of leave management and payroll, it’s a legal requirement.
So I’ve written this short guide on paying public holidays. It doesn’t attempt to cover every public holiday scenario, as there are many moving parts. Instead, it provides an overview and answers some of the questions we commonly receive from New Zealand businesses.
Otherwise working days
Firstly, public holidays are pretty simple for any worker with a fixed working schedule (whether part-time or full-time).
Ask yourself: is the public holiday a day the person would normally work (known as an 'otherwise working day')?
This test is easy to apply for any employee with a fixed work pattern. For example: a regular Monday to Friday, 40 hour-a-week employee will most likely receive all 11 public holidays every year. The only times they might miss out is if they are off work on unpaid leave for some reason.
Another example: if a person has a fixed, part-time pattern of working every Tuesday to Thursday, they won't work on public holidays that fall on a Monday or a Friday so won't receive any payments for those days.
What to pay staff
Having established whether the day is an otherwise working day, you then have to look at what to pay.
If the person had the day off
- If the day is an otherwise working day, the employee receives payment for the day off.
- If the day is not an otherwise working day, they get the day off but don’t receive payment.
If the person worked
- If the day is an otherwise working day, they get payment of time-and-a-half, plus an alternative holiday (day in lieu).
- If the day is not an otherwise working day, they get payment of time-and-a-half but no alternative holiday.
Variable work schedules can present challenges, but most employers still operate a roster system and this can be relied upon to determine who gets a public holiday.
Where the rostered days naturally rotate to fall on the public holiday, it is an otherwise working day so those employees get the public holiday entitlement. Where the roster naturally rotates so the public holiday is a rostered day off, the public holiday is not an otherwise working day.
You must also look at the employment agreement to ensure you are meeting any entitlements specified in there.
You cannot adjust the roster or take an employee off the roster so that they miss out on the public holiday.
Can I insist that employees work on a public holiday?
Any employee can work on a public holiday if they agree to do so, but an employer can only insist that an employee works on a public holiday if their employment agreement has a clause specifying this and the public holiday is an otherwise working day for the person.
Easter Sunday is not a public holiday but is considered a day of significance across New Zealand. Because of this, all shop employees have the right to refuse to work on Easter Sunday, and don’t have to provide a reason for refusing.
If you want to require an employee to work on Easter Sunday, you must notify them of this requirement at least 4 weeks (but not more than 8 weeks) before the day. This notice must be in writing.
If the employee refuses, they must notify you within 14 days of your request and their refusal must be in writing.
Any employee that normally works on a Sunday is paid their normal rate and is not eligible for a paid day off (day in lieu) later.
If you have rostered somebody to work on the public holiday and they are sick, they qualify for a paid public holiday. Here’s a great summary straight from the Employment.govt.nz website:
“When an employee would have worked on a public holiday but is sick or bereaved, the day is treated as a paid unworked public holiday and the employee would be paid their relevant daily pay or average daily pay, but would not be entitled to time-and-a-half or an alternative holiday; no sick or bereavement leave is deducted.”
Public holidays can be transferred by agreement between the employer and employee. We get a lot of questions about this whenever a public holiday falls on a Tuesday, Wednesday, or Thursday.
For example, if ANZAC Day falls on a Tuesday, you could - by agreement with employees - move the public holiday to Monday, granting a long weekend. Employees would receive payment for Monday off work as the transferred public holiday and Tuesday is now a normal working day; they attend work and get paid normal time, with no alternative holiday.
This must be in writing and must be agreed upon. If your workplace cannot accommodate this transfer, you do not have to agree to an employee transfer request. Equally, you cannot force a transfer if the purpose of the transfer is to reduce entitlements.
Stand-down or qualifying periods
We sometimes get asked if there is a stand-down period or qualifying period before an employee receives a public holiday entitlement and the answer is no, there is no qualifying period.
Employees are entitled to public holidays from their first day of work.
For example, if a Monday to Friday worker starts with you on Monday, 24 April, they will get a paid day off on Tuesday, 25 April for ANZAC Day. If they work, they will receive time-and-a-half, plus an alternative holiday (day in lieu).
Restricted trading days
There are three and a half days when the majority of shops must be closed under the Shop Trading Hours Act 1990. These days are:
- Christmas Day (a public holiday).
- Good Friday (a public holiday).
- Easter Sunday (not a public holiday).
- ANZAC Day, until 1.00 pm on 25 April (a public holiday).
Almost all shops are required to be closed, other than shops with exclusions either due to the nature of their trade (petrol stations, cafes etc.), or those with area exemptions as prescribed by local Council bylaws.
What to pay employees
If your business can't offer people their usual working hours due to shop trading restrictions, you still need to pay them their minimum contractual hours of work for the relevant pay period.
To do this, you need to ensure you can either:
- Make the additional hours available to them within the pay period, so they have the ability to work their contractual hours; or
- Pay them in lieu of working, in good faith.
If the above two options aren’t viable for your business, it may be possible to negotiate reduced hours of work during the impacted pay periods. This consultation with employees needs to occur well in advance of the public holidays.
As always, if you are confused or have a very specific and/or unusual scenario, then consult an expert. The team at MyHR is available to help you get this right.