Payment if an employee works on a public holiday

You must pay all your employees time and a half for any time worked on a public holiday, regardless if they are part-time or full-time, or permanent, fixed-term or casual.

All workers in New Zealand who work on a public holiday must be paid time and a half for all hours worked between 12:00am and 11:59pm.

Note that the Holidays Act 2003 explicitly excludes penal rates to be paid on the time and a half portion. Time and half should be calculated using an employee’s base wage.  

Payment for unworked public holidays

Relevant Daily Pay

The default payment for an unworked public holiday is ‘relevant daily pay’ (RDP). The Holidays Act defines relevant daily pay as ‘the pay which an employee would have received had they worked on the day concerned’. 

Relevant daily pay includes: 

• payments such as regular (taxable) allowances, commission and bonuses if the employee would have received them on the relevant day 
• overtime payments if the employee would have received them on the relevant day 
• the cash value of board or lodgings if this has been provided by the employer. 

Average daily pay

 In some cases, RDP cannot be calculated easily. The Act anticipates this and provides a secondary option for calculating ‘average daily pay’. 

This is only to be used in two situations: 

• where it is not possible to determine an employee’s relevant daily pay, or; 

• the employee’s pay varies within the pay period. 

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. 

Leave without pay or unpaid days off do not get included into average daily pay.  

Average daily pay should not simply be the back-up option if RDP is tricky. You need to make a practical attempt at working out relevant daily pay, as the Act promotes this as the preferred option.  

There are some situations where you may use either relevant daily pay or average daily pay. For example, where your employee’s daily pay varies in the pay period, but the variation is so regular and predictable that it is straightforward to determine what the employee would have earned on the day if they had worked. 

In these situations, we recommend that you use RDP (where this can be calculated) as this will always comply with the Holidays Act 2003). 

Meaning of gross earnings 

The Act takes a broad approach when addressing what should be included in gross earnings. However, the rule of thumb is that anything that is within your employment agreement should be included, even if the value of this is little to nothing. The Act specifically lists the payments that should be included in gross earnings. However, the Act explicitly excludes some payments as they are discretionary and are largely on the occurrence of a specific unforeseen event.

Alternative holidays

The Act provides a provision for your employees to be rewarded with an alternative holiday (formerly known as a ‘day in lieu’) for not having had the full benefit of the public holiday in respect to the time off. An alternative holiday is only awarded to employees who would have normally worked on the day of the public holiday and physically performed work on the day.  

Working out if your employees will obtain an alternative day can be a difficult task, particularly if they work sporadically. Employees who have intermittent hours of work and no clear, identifiable pattern prior to working a public holiday are less likely to receive an alternative holiday. Previous patterns and rosters should be strongly considered.  

An important point to note is that alternative holidays are provided regardless of how many hours an employee works on the public holiday. 

An alternative holiday is a paid day off that is exclusive from other entitlements. It must be taken at a time agreed between you and your employee. However, if you cannot come to an agreement on a time, you can give your employee 14 days’ notice to take the alternative holiday.  

Payment for an alternative holiday 

An employee is paid at least their relevant daily pay (or may be paid average daily pay if applicable) for the hours that they would have worked on the day they take the alternative holiday. For example, an employee gets an alternative holiday for working three hours on Easter Monday and they take their alternative holiday on the following Friday (and they would usually work eight hours on a Friday). The employee must be paid the amount that they would have received had they worked on that particular Friday, e.g., they would receive pay for eight hours. 

Payment for alternative holidays taken must be made in the pay for the period when the holiday is taken. 

Cashing up an alternative holiday 

The Act provides an option for you and your employees to agree to an alternative holiday cash up. Like the annual holiday cash up provision, there are a couple of restrictions: 

• a cashing up of an alternative holiday can only be done 12 months after becoming entitled to it. You can refuse a cash up and cannot force an employee into a cash up 

• the value of the cash up for an alternative holiday is not legislated. There is not a set formula for how much it should be. We recommend that you and your employee should come to a pragmatic agreement or err on the side of caution and use relevant daily pay or average daily pay where applicable. 

Need more information? Do not hesitate to email us at [email protected] or give our Advice Service a call on 0800 472 472 (or 1800 128 086 from Australia).