Paying Properly for Public Holidays this Festive Season
General / 25 February 2015
Paying properly for public holidays this festive season beats paying the penalties if you don’t.
Many employees watch what they are paid closely and payments for public holidays are no exception. Employees are likely to ask questions if they suspect they’ve been short-changed.
We understand that it can be a challenging time of year for employers, as you try to make sense of the Holidays Act 2003 and understand employee entitlements.
Observing and transferring public holidays this Christmas and New Year
This year Christmas Day and New Year’s Day fall on a Wednesday and Boxing Day and the day after New Year’s Day fall on a Thursday. This means that there are no special rules for any of the holidays this festive season as they will be observed on the days they fall and employees would be paid for those days only if they would otherwise be working days for them.
Since 1 April 2011 employers and employees can agree to transfer the observance of public holidays to another working day if a written agreement identifies which public holiday is being transferred and the new calendar date it is being transferred to. The new date can’t be another public holiday and must be a normal working day for the employee. For example, if an employee normally works Wednesdays, you could agree to transfer Christmas Day to Wednesday 9 January 2014. In any lawful exchange, entitlements transfer fully to the new day. But an employer can’t do it solely to avoid obligations or if it reduces the total number of paid public holidays an employee otherwise gets. If all that swapping seems a bit much – an employer can promulgate a policy prohibiting exchanges.
Employers may have to pay staff even if they don’t work. Using this festive season as an example, an employee who normally works on a Wednesday will be entitled to their normal pay for Christmas Day even if they don’t work. But if they do work, they get their normal pay, plus half that amount again, for the hours they actually work. They also get an alternative holiday (commonly called a day in lieu) to take later on.
An employee who doesn’t normally work on a Wednesday will only become entitled to be paid if they actually work. Then they get their normal pay, plus half that amount again, for hours they actually work.
Drilling down, normal pay means the employee’s relevant or average daily pay for the public holiday. Relevant daily pay means the amount of pay an employee would have received had they worked. It includes regular payments like commission and overtime rates if the employee would have received them had they worked. So if an employee normally works and is paid for 10 hours on a Wednesday – this is what they should be paid for.
If an employee’s daily pay varies within the pay period relating to the public holiday (or if it’s not possible or practicable to calculate the relevant daily pay), then an employer can use a daily average of the employee’s gross earnings for the previous 52 calendar weeks.
Would or Wouldn’t?
Not sure if your staff would‘ve worked? Try to reach agreement after considering the employment agreement and work patterns. It doesn’t matter whether an employee is casual, fixed term or permanent – always ask whether “but for” the day being a public holiday, the employee would have worked. The answer to this question requires you to look at your specific situation and staff.
Knowledge is Key
Whether you will or won’t work on the public holidays this festive season, make sure you know when and what your employees are entitled to. Some staff won’t be entitled to anything but you need to know why not and answer any questions in a way that you and they understand. Paying properly for public holidays beats paying penalties if you don’t.