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Calculating payments for working on a public holiday

How to calculate payments for employees who work on public holidays.

Employees are entitled to a paid day off on a public holiday if it’s a day they would have otherwise worked on. If they work on that public holiday they’re paid at least time and a half for the time they work and get an alternative day off (if it is an otherwise working day for them).

Find out how to calculate payments for alternative holidays.

The employee’s entitlement to be paid time and a half for working on a public holiday must be included in the employee’s employment agreement. The employment agreement could give the employee more than time and a half for the hours worked, for example, it might say double-time for working on a public holiday, but it can’t give the employee less than time and a half.

Read more about time and a half and employment agreements.

Payment for working on a public holiday

The starting point for deciding how much an employee should be paid for working on a public holiday is the employee’s relevant daily pay (or average daily pay).

Under the Holidays Act 2003, an employee gets the greater of:

  • the amount of the employee’s relevant daily pay (or average daily pay) for the time actually worked on the day (not including any penal rates that relate to that day) plus half that amount again (time and a half), or
  • the amount of the employee’s relevant daily pay that relates to the time actually worked on the day including any penal rates.

An employee can get more than this if it is stated in their employment agreement.

Using relevant daily pay

Employers should always try to work out an employee’s relevant daily pay first. In many cases this is easy.

Scenarios

Matt is part-time and earns about $23,000 per year working on average 16.5 hours per week across 3 shifts. The days of the week he works on and the length of each shift varies from week to week.

Sunday is a public holiday and Matt is rostered to work for 6 hours. Matt’s employment agreement doesn’t give him any penal rates for working on Sundays. Matt’s relevant daily pay is easy to calculate because he is working on the day, therefore this should be used as the basis to calculate what he earns for working the public holiday. Matt will be paid his relevant daily pay (his hourly rate) for 6 hours, multiplied by one and a half. He will also receive a paid alternative holiday.

If Matt’s situation is the same as above except his employment agreement gave him double-time for working on a Sunday (a penal rate), then both calculations would need to be done. Matt would be paid the greater of:

  • the portion of his relevant daily pay (not including any penal rates) that relates to the time he works, plus half that amount again, or
  • the portion of his relevant daily pay that relates to the time he works (including his penal rate provision of double time).

If a salaried employee has regular hours of work, the relevant daily pay can be calculated by dividing the annual salary by 52, and then by the number of days worked each week.

For example, Ella’s salary is $40,000 per year and she works five 8-hour days per week:

  • her weekly pay is $769.23 (40,000/52)
  • her relevant daily pay is $153.85 (769.23/5)
  • time and a half the relevant daily pay is $230.78 (153.85 x 1.5).

Ella is paid for the time she actually worked on the basis of $230.78 per day. For example, if she works only half a day, she gets paid $115.39 (half of $230.78). Ella would also get a full 8-hour alternative holiday if she would have normally worked on the day, no matter how many hours she worked on the public holiday. (If Ella usually did paid overtime on the day the public holiday fell on, this would need to be included in her relevant daily pay calculation.)

Rima has regular hours each week, is paid an hourly rate and no additional payments. Her employment agreement says: “The pay rate for this position is $16 per hour. For time worked on a public holiday, the pay rate is time and a half.”

Rima will get paid $24.00 ($16 x 1.5) for each hour she works on the public holiday.

If an employer guesses instead of doing the calculations, it may lead to relevant daily pay being worked out incorrectly. This is against the law and could lead to the employer receiving a large financial penalty.

Using average daily pay

Average daily pay is a daily average of the employee’s gross earnings over the past 52 weeks. This is worked out by:

  • adding up the employee’s gross earnings for the period, and
  • dividing this by the number of whole or part days the employee either worked or was on paid leave or holidays during that period.

If the employee is working on the public holiday, an employer should always be able to work out their relevant daily pay and should never have to use average daily pay.

If you can’t work out or agree what an employee’s pay for a public holiday should be, contact us for help.

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