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Payroll team update

Holiday pay and entitlements: How to calculate

The holiday season is a chance to relax with family and friends. Take the time to calculate and pay your staff what they're entitled to, and everyone will have a merry Christmas. Public holidays, annual closedowns, different pay rates – there are many considerations in the run-up to Christmas apart from buying presents.

Employees are entitled to a paid day off on a public holiday if it would otherwise be a working day. Many businesses have an annual close down during the Christmas period, when employees have to take time off, even if they don't have any annual leave. If public holidays fall inside your annual closedown period, you must pay employees for them if they're on days they'd usually work.

This Christmas season two public holidays fall on a Saturday – Boxing Day and January 2, so this has implications for employees. For employees who don't work weekends, the first workday after these dates will be treated as their public holidays – so they won't have to work on Monday 28 December 2015 and Monday 4 January 2016.

If your employees usually work weekends, then there are two options:
  • They can get the Saturdays as paid days off
  • If they work on those Saturdays, you must pay them time and a half and allow them to take a paid day off later (alternative day).
Less than a year employed?

If you have an employee who has been in the job for less than 12 months, they still have to take time off during an annual shutdown.

Here's what you should do for these new employees:
  • Step 1. Pay them 8% of their gross salary earned up to the shutdown start date, less any annual leave already taken.
  • Step 2. Change the date they become entitled to annual leave to one year on from the start of the shutdown.
  • Step 3. Remember to allow for paid public holidays if these fall on a day they usually work.
OR Let them take paid annual leave in advance (you both have to agree to this).

REMEMBER - You must give employees 14 days' notice of the closedown.

Calculator
Get your calculations right by using the holiday pay tool on the Ministry of Business, Innovation and Employment's website http://www.ird.govt.nz/calculators/keyword/paye/calculator-paye-holiday-pay-2016.html

REMEMBER

Payment for annual holidays is paid at the higher of the ORDINARY WEEKLY PAY at the time the holiday is taken OR the employee's AVERAGE WEEKLY EARNINGS over the 12-month period before the annual holiday is taken.

REFERENCES:

http://www.business.govt.nz/news/holiday-pay-entitlements
http://employment.govt.nz/er/holidaysandleave/annualleave/payment.asp
http://employment.govt.nz/er/holidaysandleave/annualleave/regular-annual-closedowns.asp

Payroll team at Accounted4
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
Kathryn Leong Extn. 859