Holiday payroll and getting it right

Summer holidays are fast approaching, and no doubt many people will be taking time off work to have a break over this period. As an employer, take some time to think about how you want to organise your business operations over the summer, to ensure you get the paperwork right and avoid breaches of the Holidays Act 2003.

Taking time out over the summer? - You can have an “annual closedown” for your whole business or part of it but give employees at least 14 days’ notice in writing. You can ask staff to take their existing annual leave. If they don’t have leave left, they can take leave without pay or you can both agree to them taking annual leave in advance.

Need employees to work the public holidays? - The only way you can make employees work on a public holiday is if it falls on a day they normally work, and the requirement to work on the public holiday must be included in their employment agreement.

Employees asking to cash-up? - Staff can cash-up up to one week of their minimum four weeks’ annual holidays in any entitlement year if you’re okay with it. If not, you must decline in writing (but you don’t have to give a reason).

Need to modify an employment agreement? - There are rules to follow, so head to Employment New Zealand or Wolters Kluwer's New Zealand Workforce Manager.

When it comes to payroll and annual leave, working out what an employee gets paid for taking annual leave will depend partly on what they have earned in the previous 12 months. Employees who take their annual leave entitlement, these holidays are paid at the rate of Ordinary Weekly Pay or Average Weekly Earnings, whichever is greater. It’s important to understand the difference between how these two rates are calculated, and then ensure you are applying them correctly. You can find out more about how to calculate payment rates for holidays and leave at Employment New Zealand.

Remember, Christmas Day and New Year’s Day fall on a Sunday this year. This means that these public holidays will be Mondayised. However, Boxing Day and the Day After New Year’s Day both fall on a Monday, therefore Christmas Day and New Year’s Day will be Tuesdayised.

Any employee working on Christmas Day and New Year’s Day who wouldn’t normally work on a Sunday, the public holiday is treated as falling on the following Tuesday. But any employee who would normally work on Sunday, then the public holiday is treated as falling on Sunday (the calendar date of the public holiday).

Whichever day the entitlement falls on for them, if the employee works on that day, they will get time and a half for working on that day. And if the public holiday falls on what would otherwise be a standard working day for them, and they work on that day, they are also entitled to an alternative holiday.

Talk to us about your financial planning and payroll for the holiday season.

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