How to administer public holidays in your business

2022 has seen the introduction of two new public holidays in New Zealand – the annual Matariki (Maori New Year) observance, and the one-off Memorial Day for Queen Elizabeth II on 25 September. The administration of public holiday entitlements for employees raises a lot of queries for employers as they negotiate various scenarios that may apply to their organisation. Here are the key things you need to know about administering public holidays for your employees.

Public holiday entitlements

The Holidays Act 2003 provides entitlements for the observance of public holidays in New Zealand. These entitlements include:

• Payment as if they had worked on a public holiday if they have the day off.

• Payment of time-and-a-half for any work undertaken on a public holiday.

• A day-in-lieu or ‘alternative’ holiday, to be taken later, if the employee would normally work on the day on which the public holiday falls, and they actually work on that public holiday.

These are minimum statutory entitlements. Some employment agreements, especially in historically highly unionised workforces, may have additional entitlements which the employer needs to provide. This usually takes the form of a higher penal rate (e.g. double time) for any hours worked on a public holiday.

Otherwise working day

A key term for interpreting public holiday entitlements is the ‘otherwise working day’. This term asks the question, “would the employee normally have worked if this day was not a public holiday?”. The answer this question dictates what entitlements the employee must receive. The most common scenarios include:

• The public holiday falls on a day the employee would otherwise have worked, and they did not work.

  • You must pay them their normal salary/wage, as if they had worked.

• The public holiday falls on a day the employee would otherwise have worked, and they did work.

  •  You must pay the employee at time-and-a-half (i.e. T1.5) for every hour that they actually worked, and:

  • You must give the employee a paid day-in-lieu to be taken at a later date to be agreed between the employer and employee.

• The public holiday falls on a day the employee would otherwise not have worked, and they worked.

  • You must pay them at time-and-a-half (T1.5) for every hour that they worked.

  • There is no entitlement to a day-in-lieu, as the day is not otherwise a working day for the employee.

Working out whether a public holiday falls on an otherwise working day is contingent on the typical pattern of days the employee works. For permanent employees with set days of work (e.g. Monday to Friday; every Monday and Tuesday; etc), it is a simple exercise. Where employees work rotating or sporadic shifts, or work a lot of on-call or self-rostered shifts, the employer is required to undertake more complex calculations to work out which public holiday entitlements apply. A good payroll system configured to the New Zealand Holidays Act can usually make these calculations for you, but it is important to check on this with your payroll vendor. Employment New Zealand provides an online calculator which can be helpful for some scenarios. Failing to pay correctly can result in an audit requiring backpay remediation of 6 years. If in doubt, get in touch with us here at Avodah HR, and we can help you with working out what needs to be paid.

Does my employee have to work?

The ability for the employer to require the employee to work on a public holiday must be contained in the written employment agreement. A good employment agreement will either provide that an employer can ask an employee to work, and they must work, or that they can refuse to work. If the employment agreement is silent, you may still ask the employee to work on a public holiday, but you cannot force them to do so.

We recommend that employers include a term in their employment agreement that requires approval of the employer before the employee can work on a public holiday, in order to manage expectations and the additional costs associated with public holidays. We provide up-to-date employment agreement templates and can also build tailored templates for your business if required.

If you need assistance with administering public holiday entitlements, or this article raises any questions for your organisation, contact us below.