Do you have your holiday pay sorted?

Monday 11 December, 2023

Working out holiday pay and leave entitlement can be challenging at the best of times, even more so during the “silly season”. Below is a summary of what to keep in mind when calculating public holiday and annual holiday pay.

Public Holidays

Employees are entitled to a total of twelve public holidays each year if the public holiday falls on a day they would normally work. If an employee works on a public holiday:

• They must be paid time and a half; and
• If the public holiday falls on a day that an employee would have otherwise worked i.e. a “normal working day”, they must also get a paid day off at a later date.

A day that an employee would otherwise work is a day that an employee would have been working had the day not been a public holiday*.

An employee can only be required to work on a public holiday if this is included in their employment agreement and it is a day they would normally work.

Employees who work on public holidays are entitled to an alternative day off. They get a full day off, regardless of how many hours they worked on the public holiday.

They do not get an alternative day if:

• they would not usually have worked that day
• they only work on public holidays
• they were on call but did not have to do anything, and being on call did not restrict them doing what they wanted to do with their day.

Mondayisation

When a public holiday falls on a Saturday or Sunday, the public holiday is Mondayised (and sometimes Tuesdayised for public holidays over Christmas and the New Year).

Mondayisation only happens if the employee does not normally work on the calendar date of the holiday. Where an employee normally works on the day of the public holiday’s calendar date i.e. a Saturday or Sunday, then there is no Mondayisation for them and their public holiday benefits apply to the calendar date.

Where an employee would normally work on both the calendar date of the public holiday and the Mondayisation date, their public holiday is on the calendar date. They do not get two public holidays.

Christmas Closedown

Where public holidays fall inside an annual closedown period or during a period an employee takes annual leave, employees must be paid for public holidays that fall on days they would normally work, including weekend public holidays moved to Monday or Tuesday.

*Normal Working Day

To work out whether a public holiday would have been a day an employee would have otherwise worked, an employer must consider all of the following factors:

• what the employment agreement says
• the employee's usual work patterns
• any other relevant factors such as:
  • if the employee works for the employer only when work is available
  • the employer's rosters or other similar systems
  • the reasonable expectations of the employer and employee as to whether the employee would have worked on that day
  • if the employee would normally have worked if it were not a holiday (public or alternative) or if the employee were not on leave (sick or bereavement)

Annual Holidays

Employers must:

• give employees at least four weeks of paid holidays annually (excluding public holidays and sick leave), either in full each year on the anniversary of their start date, or building up throughout the year
• let employees take at least two weeks at once if requested
• consider any request to pay out up to one week of annual holiday entitlement, unless employers have a policy stating they would not cash up any annual leave
• keep records of all leave
• give employees at least 14 days’ notice before an annual closedown
• give employees at least 14 days' notice if requiring them to take annual holidays.

Annual holidays are paid out at the rate of the greater of ordinary weekly pay and average weekly earnings.

Employers can also:

• set limits on how much leave employees carry over each year
• make employees who have built up too much leave take some or all leave
• let employees exchange up to a week of annual leave for cash each year
• decline employee’s request for leave if good reason, e.g. an especially busy sales period
• agree to let employees take paid leave in advance.

As the Christmas holidays approach, understanding holiday pay regulations is essential for both employers and employees. Ensuring compliance with the Holidays Act 2003 fosters a fair and transparent working environment, allowing everyone to enjoy the festive season while being appropriately compensated for their time off.

If you require any assistance in working out your holiday pay obligations or entitlements, please contact one of our experts below.