It's not all black and white
Its not all black and white
With Labour Day fast approaching and us in Marlborough enjoying our annual holiday the following week, we have two long weekends coming up. A great time of year for us to get outside, catch our breath and be with our families.
For employers, it can be quite different. Many of those who don’t have to open shop will see it as a time to “catch up” in the office or on a backlog of work. Two four-day weeks in a row will create its own workflow problems – a lot of businesses must fit five days’ work into four days. The demand doesn’t go away.
Many will have no choice but to open their operation on a public holiday and will have to ask employees to work over the period.
So, when and how to pay employees for Public Holidays when they have the day off? This is clearly stated in the Holidays Act, but it’s not all black and white. Surely that’s a contradiction? I will explain:
If an employee would normally have worked on a public holiday according to their work pattern or their roster, then they get paid for the day off. Easy? So, what do you pay them? Well, if they have a regular work pattern, yes, easy, pay them what they normally earn in a day. This is called RDP or relevant daily pay
What if they don’t have a regular work pattern? Not so easy. First you ask yourself “if it hadn’t been a public holiday, would they have worked?” Look at what they have done over the last 4-6 weeks and if they have worked on that day of the week more often than not, you need to pay them. Now you can’t just leave them off the roster for that week if they would normally be rostered on, say, a Monday. No! Don’t do that!
If the employee doesn’t have a regular work pattern or regular hours you need to pay them their ADP or average daily pay. This calculation is their gross earnings for the last 52 weeks, (including bonuses and other types of additional pay) divided by 52. Remember, this is only for people who will not be working the public holiday.
What about people who do work on a public holiday?
That’s easier – you pay them their normal hours of work plus 50% extra for the hours they worked, and they also get an alternative holiday day to be taken at another time (as a “reward” for working on a public holiday). This can get a bit messy for someone who normally works a full day but only does a few hours on a public holiday. See – not all black and white. There are other messy scenarios as well. What about callouts? Shift work which is partly on a public holiday and partly not? And there’s more.
Of course, the above is the minimum you must do as an employer. You can agree with your employee to go over the minimum requirements and this can be addressed in your employment agreements.
So, rather than being black and white, the Holidays Act proves to be quite colourful.
One last word of warning – don’t expect or assume that your payroll software will get all these calculations right. It all comes down to the data you’ve been entering for the last 52 weeks and those messy scenarios will not be addressed by the limited brain of your payroll software. With all the artificial intelligence and machine learning available to us right now, the human brain is still required.