Public holidays – the long and the short of it

After a lull of public holidays, between now and June next year is the season of short weeks.

Most of us are looking forward to the long weekends to recharge batteries, and spend time with family and friends.

Sorting out pay entitlements for employees over the public holidays comes with a bunch of rules (of course). It can be confusing so read on and we hope we can simplify it for you. 

Public holidays

First of all, there are two groups of holidays, each with slightly differing entitlements:

1. Christmas Day and Boxing Day (25 and 26 December), New Year's Day and the day after (1 and 2 January), Waitangi Day(6 February) and ANZAC Day (25 April)
2. Good Friday and Easter Monday (dates variable), Queen's Birthday (first Monday in June), Labour Day (fourth Monday in October) and Provincial Anniversary Day (date determined locally).

Special arrangements apply to the public holidays over the Christmas and New Year period, and Waitangi Day and ANZAC Day:

Over the Christmas and New Year period:

• If the holiday falls on a Saturday or Sunday and that day would not otherwise be a working day for the employee, the holiday is transferred to the following Monday or Tuesday so that the employee still gets a paid day off if the employee would usually work on these days.
• If the holiday falls on a Saturday or Sunday and that day would otherwise be a working day for the employee, the holiday remains at the traditional day and the employee is entitled to that day off on pay. However, an employee is not entitled to more than four public holidays over the Christmas and New Year period, regardless of their work pattern.

For Waitangi Day and Anzac Day:

• If the holiday falls on a Saturday or Sunday and that day would not otherwise be a working day for the employee, the holiday is transferred to the following Monday so that the employee still gets a paid day off if the employee would usually work on these days.
• If the holiday falls on a Saturday or Sunday and that day would otherwise be a working day for the employee, the holiday remains at the traditional day and the employee is entitled to that day off on pay.

Public holidays during a close-down period

If a business has a closedown period that includes public holidays (as can happen over the Christmas and New Year period) then the employee is entitled to paid public holidays if these would be otherwise working days for them.

Payment when your employee does not work on a public holiday

The employee is paid for the public holiday as if they had worked as normal on the day and is entitled to be paid their 'relevant daily pay' or 'average daily pay'. For most employees working a regular pattern of hours, the pay cycle continues unchanged. An employee who does not normally work on the day in question and who does not work is not entitled to a payment for the day.

Payment when your employee does work on a public holiday

The starting point for payment for working on a public holiday is the employee's relevant daily pay or average daily pay. If an employee works on any public holiday, that work is paid a minimum payment of time and a half for the time they actually work on the day. An employee is entitled to the greater of either:

• the portion of the employee's relevant daily pay or average daily pay that relates to the time actually worked on the day, less any penal rates, plus half that amount again (time and a half), or
• the portion of the employee's relevant daily pay that relates to the time actually worked on the day including any penal rates.

The only time an employer may choose to use average daily pay, to calculate an employee's pay for working on a public holiday, will be when that employee's daily pay varies in the pay period in question. This is because the trigger for using average daily pay for the reason that it is 'not possible or practicable' to determine relevant daily pay will never be met when the employee actually works on the public holiday.

Alternative holidays when an employee works on a public holiday

If employees works on a public holiday they are entitled to be paid time and a half for the hours they work and if it is an otherwise working day for the employee they are also entitled to another day off on pay. This alternative holiday recognises that the employee has missed out on having a day off work on a day of national significance and enables them to take a day off at another time.

This provision includes employees working shifts and some employees on call. Both types of employees get the full day off, even if they only work for a small part of the day.

The alternative holiday can be taken at any time mutually agreeable to the employer and employee, and is paid at the employee's relevant daily pay or average daily pay (where applicable) for the day taken off.

If an employee does not take their alternative holiday within 12 months of becoming entitled to it, the employee and employer can agree for the alternative holiday to be exchanged for payment. In this instance, the payment for the alternative holiday is to be agreed between the employer and employee and must be paid as soon as practicable once the agreement has been made.

An alternative holiday does not apply when an employee:

• works on a public holiday and that day would not otherwise be a working day
• is on call on a public holiday but is not required to restrict activities
• is only employed to work on public holidays

Our advice

As you can see the rules are complex. If in doubt, give us a call, on 578 3386 or email us at askme@tva.co.nz, we're more than happy to help.

Brenda McInnes

Brenda McInnes heads TvA's Business Support team. The team covers daily administration for business owners, such as Payroll, GST, and ACC. If you have any questions related to your GST send email at support@tva.co.nz or contact Brenda on 03 578 3386.