Compliance Q&A: Holidays and Employee Entitlements - Tauranga Chamber of Commerce

Compliance Q&A: Holidays and Employee Entitlements

It is that time again where several public holidays and long weekends ease us all back into the working year.

This understandably raises questions around employer obligations and employee entitlements. The Holidays Act 2003 (Act) is complex, and under review by Government for that reason. 

Copeland Ashcroft Law gives an overview of employee entitlements, covering FAQs on public holidays and annual holidays, in this article.

Did you know? Employees must be told of their holiday and leave entitlements under the Act at the start of employment, which is why it is sensible to set this out in the individual employment agreement. 

It is important to get holiday entitlements and payments right, because significant penalties apply for failing to meet these minimum rights and there is a six year claim limitation period for back pay.

Who is entitled to a paid day off on a public holiday? Employees are entitled to be paid for a public holiday even if they do not work that day, if the day which the public holiday falls on would ‘otherwise be a working day’ for them.  

How do I tell if a public holiday would otherwise be a working day for an employee? The Act states that an employer must consider the employment agreements, employee work patterns, rosters, if employees only work for the employer when work is available and the reasonable expectations that the employee would work on the day concerned.  A useful question to ask is, but for the public holiday, would the employee have worked that day?  If the circumstances are more complicated than that, check out MBIE’s “otherwise working day calculator” here.

What should employees be paid for working public holidays? For any work done on a public holiday, employees must be paid their “normal pay” (either relevant or average daily pay, as defined in the Act) plus half that amount again for the hours they have worked.

Who is entitled to an “alternative holiday” (day in lieu)? If an employee works on a public holiday that is on a day that would otherwise be a working day for them, they will also be entitled to an alternative holiday (commonly called a day in lieu). Alternative holidays can either be used by agreement or at the employer’s direction, or they may be cashed out by agreement.

Can I transfer a public holiday? Yes, by agreement with the employee in writing. This agreement must specify what public holiday is being transferred and the day it is being transferred to. The new date cannot be another public holiday and must be a day that would otherwise be a working day for the employee.

Compliance Q&A Legal Matters

Who is entitled to annual holidays? All employees accrue annual holidays of four weeks each year, unless these are paid with their pay each pay period which is allowed (provided specific requirements) are met for casual or fixed term employees engaged for less than 12 months.  Employees can only use annual holidays to take leave once they become entitled to these, after 12 months’ employment, unless the employer agrees otherwise (and most do).  Unused annual holidays must be paid out at the end of employment.

Can holidays be cashed up? Yes, but only up to one week of any holiday entitlement can be “cashed up” and paid to an employee, during employment, and only by agreement.

What rate are annual holidays paid at?  There are three possible calculations per the Act, “ordinary weekly pay”, ”average weekly pay” or 8% of gross earnings, depending on when the holidays are being used or paid out. MBIE has more information here.

Can I require employees to take annual holidays? Yes, during a customary closedown period (your employment agreement should cover this and specific requirements apply), or otherwise where the employee is entitled to annual holidays and where agreement as to when they will be used cannot be reached, with 14 days’ notice.

Message for Employers

Given the number of public holidays coming up it pays to know what your employees are entitled to. If you would like more information regarding holidays, Copeland Ashcroft Law, based here in Tauranga, can help. 

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