As an employer, how do you sort out holiday pay?
It’s an important part of your payroll process and one that you want to get right. If your team are
working public holidays, then you want to ensure you are paying them correctly.
But, the regulations can feel really confusing.
How much do you pay them and should it be at a different rate?
Don’t panic. We are here to help. Let’s check out what public holiday payment is, what you need to
keep in mind – and why smart support from Xero and a great bookkeeper can make holiday pay
easy.
How To Get Public Holiday Pay Right, Every Time
What Are My Obligations?
Kiwi employers must comply with the Holidays Act 2003, correctly calculating employee leave
entitlements and payments for annual holidays. Whether your staff work full-time, part time, or
casually, they’re entitled to any benefits that come from working on public holidays.
So, what does that mean in practical terms?
Well, it will all depend on your particular employment circumstances. If you aren’t sure how holiday
pay applies to your team, talk to us at CornerStone Bookkeeping or check in with MBIE for further
guidance about how to comply with the Holidays Act 2003.
Or, keep reading this article, of course!
What Is Considered A Public Holiday In NZ?
Here’s a quick reference list of the days that are considered public holidays in New Zealand. These
are the days where usual work operation ceases and public holiday pay rules apply:
● New Year’s Day
● Day after New Year’s Day
● Waitangi Day
● Good Friday
● Easter Monday
● Anzac Day
● Queen’s Birthday
● Matariki
● Labour Day
● Christmas Day
● Boxing Day
● Regional Anniversary Days
What Do I Need To Pay?
How do you know what you have to pay for holiday pay? What an employee is paid for a public
holiday depends on:
● whether or not they actually work on the holiday (or on the day the public holiday has been
transferred to), and
● whether or not the day is one they would otherwise have worked were it not for the fact
that it was a public holiday.
Public Holidays On Weekends
When a public holiday falls on a Saturday or Sunday, an employee’s public holiday might be moved
to the following Monday (or Tuesday): known as “Mondayisation”. This only happens if the
employee doesn’t normally work on the calendar date of the holiday.
If an employee normally works on the day of the public holiday’s calendar date, then there is no
Mondayisation for them and their public holiday benefits apply to the calendar date.
If an employee would normally work on both the calendar date of the public holiday and the
possible Mondayisation date, their public holiday is on the calendar date. They don’t get two public
holidays.
When a public holiday falls on a weekend and is observed on a Monday, Xero Mondayises the
holiday for you.
To do: If your employee works a public holiday on the weekend, record this in Xero by adding the
actual holiday to a new holiday group and assign it to the employee.
Is It An “Otherwise Working Day”?
An “otherwise working day” is a day that an employee would have been working if it were not a
public holiday.
Working out whether or not an employee would have normally worked on the day in question is
usually straightforward. This is because the working pattern or roster is constant, and the employer
and employee can agree on whether the employee would otherwise have worked that day.
Important to consider:
● An employee is entitled to a paid day off work on a public holiday or alternative holiday only
for days that are “otherwise working days” for them
● If an employee works on a public holiday and the day is an “otherwise working day” for
them, they are entitled to an alternative holiday (unless they are employed to work only on
public holidays).
To do: If an employee works on a public holiday, show this on their payslip by adding a time and a
half pay item, and assigning it to the employee.
When an employee does not have a clear work pattern or there’s a lot of variation in work times, it
may be harder to decide if a day is an otherwise working day.
Tip: Use the handy Otherwise Working Day Calculator on the NZ government employment website
to help you work this out.
Public Holidays: Stay On Top Of Them With Xero
Having financial software can help you to stay on top of public holidays easily. Xero currently
provides a set of default public holidays for employees who normally work Monday to Friday. If you
use Xero for your payroll, employee payslips are automatically adjusted when a public holiday falls in
a pay period or a period of leave.
Fixed public holidays are added to Xero Payroll up to two years in advance. But things can change:
when Xero makes an update to the public holidays list within the software, the payroll admin sees a
notification in the app confirming this.
To do: Check the public holidays in Xero are right for your organisation.
Set It Up Right, Make Life Easier
If public holiday pay confuses you, then this is definitely a job you should outsource to an expert.
If you need assistance with setting up your statutory holiday pay correctly, CornerStone
Bookkeeping can help tweak your Xero – and make getting employee holiday payment right.
Get in touch with the Cornerstone team today and we’ll be happy to help with your holiday pay
queries and ongoing payroll management.