General / 25 December 2017
Paying for public holidays
The Christmas period can be a challenging time of year for employers trying to manage the minefield that is the Holidays Act 2003 (Act), but it pays to get it right (or risk a penalty award and backpay for up to six years)!
Who is entitled to payment for public holidays?
An employee is entitled to be paid for a public holiday even if they don’t work, if the day on which the public holidays falls would “otherwise be a working day” for them.
If employees work on a public holiday they are entitled to be paid their normal pay (relevant or average daily pay), plus half that amount again for hours actually worked. If the public holiday falls on a day an employee would otherwise have worked, they will also be entitled to an alternative holiday.
In summary, alternative holidays can either be used, by agreement or at the employer’s direction, or may be cashed out by agreement, when 12 months has passed since accrual.
Transfer of public holidays
Some public holidays that fall at the weekend (Christmas day, Boxing day, New Year’s day, 2 January) are automatically transferred to the Monday (if the day falls on Saturday) or Tuesday (if the day falls on Sunday) immediately following the weekend, where the weekend day is not one that an employee would otherwise have worked. Waitangi day and ANZAC day automatically transfer to the Monday if the day falls on either a Saturday or Sunday. If the employee would otherwise have worked on the day the public holiday falls there is no transfer.
Using Christmas Day 2016 as an example, which fell on a Sunday. For employees who work Sundays, that was the public holiday. For everyone who doesn’t work Sundays, the public holiday was recognised on Tuesday. The holiday is only recognised once – employees who work both Sundays and Tuesdays can’t “double dip” and claim two public holidays.
Public holidays can also be transferred to another day by agreement in writing. In that case, the agreement must specify which public holiday is being transferred and the date it is being transferred to. The new date can’t be another public holiday and must be a day the employee would otherwise have worked.
Determining whether a day would “otherwise be working day”
Not sure if your employee would have otherwise been working? The Act lists a number of factors to consider, including what the employment agreement states, what the work patterns are, any rosters or systems in place, whether the employee works only when work is available, and the reasonable expectations of the parties.
In a recent Employment Relations Authority case, fast food chain Wendy’s was held to be in breach of the Act for its handling of public holiday payments. In the determination, Wendy’s was criticised for its method of determining whether a public day was a day its employees would otherwise have worked. Wendy’s did this by analysing whether the employee had worked the same day in the preceding three weeks. If the answer was yes, it concluded the day was a day the employee would otherwise have worked and paid them for the holiday, or, if they were working, allowed them an alternative holiday. If the answer was no, they did not receive this entitlement.
It was argued that Wendy’s was manipulating and organising the roster leading up to a public holiday to ensure the three week test was not met, and no entitlement to an alternative holiday arose.
The Authority confirmed the “three week test” was unlawful, and set out that each assessment should have been made on a case by case basis, considering all the factors listed above, not just the previous roster pattern.
If you would like advice regarding public holidays, please contact our team.
Disclaimer: We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.