Navigating Holiday Entitlements

Employers may have a close down period once a year and require employees to take leave during the period of the close down.  Employers must give at least 14 days notice of any close down. 

If a business has a close down period that includes public holidays (as can happen over the Christmas and New Year periods) then the employee is entitled to be paid for those public holidays (as they would otherwise be working days for them).  In other words, as if the close down period were not in effect. 

Other factors to take into account include individualised terms in an employee's employment agreement, work patterns, rosters, and expectations about working on that day.

Close downs can occur either across an entire work place, or for part of a business (for example where sales and despatch departments remain open, but the factory closes for maintenance).

Working a Public Holiday

You can require your staff to work a public holiday if:

• The holiday falls on a day the employee would normally have worked; and
• The employment agreement states that the employee may be required to work on a public holiday.

If an employee does not want to work that day, he/she must consult his/her employer.  If an employee does work that day, he or she is entitled to (at a minimum) time and half for the actual hours worked.  This applies to both wage and salaried workers. 

Additionally, if the public holiday is a "normal working day" for the employee, he or she is also entitled to a day off in lieu.

Payment for working on Public Holidays

Employees should be paid as if they worked on that day.  In other words, if an employee works a regular pattern of hours, the pay cycle remains unchanged.

If it is not possible or practicable to determine what an employee would normally be paid that day, the employee should be paid their "average daily pay".

Average daily pay is calculated by dividing the employee's gross earnings for the last 52 weeks, by the number of whole (or part) days over which the employee earned those earnings.  This includes any day the employee was on paid leave.

Casual and Oncall Workers

There will be differences for casual and oncall workers. The Department of Labour provides an online holidays calculation tool, which can be used to work out an employee's entitlements: www.dol.govt.nz/holidaytool

Transferring Public Holidays

As of 1 April this year, employers and employees are able to agree (in writing) to transfer the observance of a public holiday to another working day.  This provision is potentially useful for employers needing to meet business needs (for example shift work and/or 24/7 operations).  It is also useful for employees wishing for personal reasons to transfer public holidays (for example if they wish to observe different religious holidays).

The agreement to transfer must be recorded in writing (either in the employee's employment agreement or separately).  The agreement should clearly set out the 24 hour period that is affected.

Cashing Up Annual Leave

Employees are also able to "cash up" one week their annual leave, by requesting this in writing.  The employer may decline a request without providing any reason.

Employers can discourage requests by clearly notifying employees that it will not accept requests to "cash up" holidays.

A policy preventing "cashing up"  may apply to the whole or part of an employer's business.  But, it is important that an employer is not seen to be disadvantaging one particular employee. 

Lessons for Employers

• Check all collective and individual agreements for additional entitlements;
• Determine client needs on public holidays and advise staff as early as possible; and
• Review your payroll dates to ensure public holidays don't interfere with normal timesheets and payroll processing.

Anyone wanting more information on the above, drafting employment agreements or other employment issues are able to contact the Fortune Manning employment law team for further information.