Who can receive ‘Holiday-Pay-as-You-Go’?

This can only be done if:

• the employee is employed on a genuine fixed-term agreement of less than 12 months, or
• the employee works so intermittently or irregularly that it is impractical for the employer to provide them with 4 weeks’ annual holidays.

In both of these situations:

• the employee must agree to it in their employment agreement and
• the 8% gross earnings must be shown as an identifiable component of the employee’s pay.

What if the employment finished in the first year of working?

During the first year of employment an employee has no Annual Leave Due. Most employers still allow their employees to take some annual leave during this period, but the leave is essentially taken in advance. If the employee leaves before they have been employed for a year they are paid out Holiday Pay in their final pay, which is typically 8% of their earnings. The value of any leave they have taken in advance would then get deducted from their final pay.

Do employees have any Annual Leave in their first year of working?

During the first year of employment, three circumstances can arise that require the calculation of the payment due for annual holidays:

• The employee may seek, and the employer may approve, the taking of annual holidays in advance.
• The employer may have a regular annual closedown of the workplace.
• The employee may resign, or the employer may terminate the employment.

What is the difference between Holiday Pay and Annual Leave?

When the employee reaches their employment anniversary they become entitled to annual leave:

• The Annual Leave Accrued balance becomes Annual Leave Due.
• The Annual Leave Taken during the year is deducted from the Annual Leave Due.
• The Holiday Pay, Annual Leave Accrued and Annual Leave Taken balances are set to zero.

At any time, an employee is owed two separate amounts - Holiday Pay and Annual Leave Due. If the employee leaves during the second year they will be paid out the Holiday Pay for that part year, and any Annual Leave Due.

How much is the rate for annual leave? Is this different from the ordinary pay rate?

Annual holidays are paid at whichever rate is the higher of:

• the employee’s ordinary weekly pay at the beginning of the annual holiday, or
• the employee’s average weekly earnings for the 12 months just before the end of the last pay period before the annual holiday.

Is a public holiday an 'otherwise working day'?

There are 11 public holidays and all employees are entitled to public holiday benefits whether they are part-time, full-time or on fixed-term or ‘casual’ employment agreements. Public holidays are in addition to annual holidays and there’s no minimum period of time an employee has to be employed to get public holiday benefits.

What an employee gets 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 a day they would otherwise have worked were it not for the fact that it was a public holiday. 

An employee can only be made to work on a public holiday if:

• it falls on a day that they would have otherwise worked on, and
• their employment agreement says they have to work on the public holiday.

Note that even if the employee is not going to receive an alternative day they are still entitled to receive time-and-a-half for the hours they work.

Public Holiday Payroll Questions

Public holiday payroll calculations can be a right pain in the backside. Especially for those of you who have to manually figure out what everyone is due.

Thus we have gathered a few issues that most of our clients were asking, please click the link to find related topics below:

Public Holiday Payroll – How to Get it Right Every Time

Christmas Holiday Payroll FAQs

Cashing out Annual Leave

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