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Relevant daily pay and average daily pay

Public holidays, bereavement and sick leave payments are calculated using relevant daily pay or average daily pay. Annual holidays are calculated in a different way.

Relevant daily pay

Relevant daily pay means paying an employee what they would have earned if they were at work on the day. This also:

  • includes payments such as commission and bonuses if the employee would have received them on the day
  • includes overtime, if the employee would have received it on the day
  • includes the cash value of board or lodgings if this has been provided by the employer, but
  • excludes any employer contribution payment into an employee superannuation fund.

Employment agreements can have a special rate of relevant daily pay for calculating payment for a public holiday, an alternative holiday, sick leave or bereavement leave, but only if the rate is the same as, or more than, the rate worked out above.

If it’s not possible or not practical to work out relevant daily pay, or because an employee’s daily pay varies in the pay period in question, an employer may use average daily pay.

Average daily pay

Average daily pay may be used if it’s not possible or practical to work out relevant daily pay, or because an employee's daily pay varies in the pay period in question.

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 an employer can use either relevant daily pay or average daily pay, they should try to work out both; this may help them to decide which option is the more appropriate.

To help with this decision, you can use the pay calculator (external link) . It will take about 5 minutes to work through.

If an employer and employee can’t agree on the amount of the employee’s relevant daily pay or average daily pay, contact us for a Labour Inspector who may work out the amount.

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