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Jumping Hurdles: Understanding Payroll and Public Holidays

Understanding Payroll and Public Holidays

One of those busy periods for payroll is when another public holiday rolls around. 

Depending on what system you’re using, you may have to make some manual checks or even calculations to ensure you’re getting it right. 

Even then, working out how to pay your employees for public holidays can feel a little like jumping hurdles, with many rules that can trip you up along the way. 

For example, how do you know if you’re required to pay your staff for public holidays? And, if you are, what exactly do you need to pay them? 

This guide aims to help you jump those hurdles by answering the most common questions I get asked about payroll and public holidays, so you can make it to the finish line with correctly paid employees. 

Should I pay my employee for a public holiday not worked?

Paying employees for public holidays is pretty straightforward if your employee has a regular work pattern. 

If the public holiday is a day they would typically work (an 'otherwise working day'), you must pay them for the public holiday. 

For example, John's working week is Monday to Friday and the public holiday falls on a Monday. Therefore, you would pay John for the public holiday.

Where it becomes not so clear-cut is where your employee does not have a regular work pattern. 

In this situation, you’ll need to make some decisions based on a mixture of different factors, including:

  • what the employment agreement says

  • the employee's usual work patterns

  • any other relevant factors, such as:

  • if the employee works for the employer only when work is available

  • the employee’s roster

  • the reasonable expectations of the employer and employee as to whether the employee would have worked on that day if it wasn't a holiday (public or alternative) or if the employee was not on leave (sick or bereavement).

To ensure you comply with the Holidays Act, it’s important that you have systems in place to consider each employee’s specific situation and work pattern.

If you’re still struggling, you might what to check out Employment New Zealand otherwise working day information to help you figure it out. 

What happens if a public holiday falls on the weekend?

Some public holidays are attached to a specific day of the week. For example, Queen's Birthday is always on a Monday. 

Other public holidays are attached to calendar dates, so the day of the week they’re celebrated is different each year (for example, Christmas and New Year’s Day).  

If the calendar date of a public holiday falls on a Saturday or Sunday, then the public holiday is moved to the following Monday (or, in some cases, Tuesday). This situation is referred to as ‘mondayisation’.

Mondayisation only happens if the employee doesn't typically work on the holiday's calendar date. For example, if the public holiday falls on Saturday and John works Monday to Friday, the holiday is moved to Monday for John.

However, if the employee typically works on the calendar date the holiday falls, there is no Mondayisation.

If you have an employee who usually works on both the calendar date of the holiday and the Monday, their public holiday is on the calendar date. They don't get two public holidays. 

What do I pay my employee for public holidays?

If your employee would normally work on the day of the public holiday they must be paid what they would have been paid had it not been a public holiday. 

This includes any:

  • regular allowances

  • overtime payments

  • bonuses they would usually receive for working this day.

For employees who have a varied work pattern and it is not possible or practicable to work out what they would have earned had it not been a public holiday, an average payment is paid. This is the employee's earnings over the last 52 weeks, divided by the number of days they've worked during that period.

In order to make this calculation, it’s important that your payroll software records individual days worked.

Check: Does your payroll software record individual days worked so you can calculate how much to pay employees with a variable work pattern who work on a public holiday?

What should I pay my employee who worked on a public holiday?

If your employee worked on a public holiday, they are entitled to be paid at least time and a half for the hours worked. This could include employees who are casual, fixed-term, or who don’t normally work on this day.

Tip: An employment agreement must include a provision that confirms the right of the employee to be paid in accordance with section 50 of the Holidays Act for working on a public holiday.

Do I have to give my employee an Alternative Holiday (day off in lieu)?

If your employee worked on a public holiday and it was a day they would typically work, you are required to give them a paid day off at another time.

You’ll need to check how this is managed in your payroll software – for example, is an Alternative Holiday (day off in lieu) added automatically, or do you need to add this manually? 

Check: How is an Alternative Holiday (day off in lieu) managed in your payroll software? Is it added automatically, or do you need to add manually?

​Final thoughts…

As you can see, paying employees for public holidays can be quite complex.

I hope this guide has answered some of your questions, and you’re feeling more confident about jumping those payroll hurdles! 

For further learning, you can take my public holiday quiz.  And if you have any doubts or suspect previous errors, you can schedule a complimentary 15-minute payroll audit to ensure compliance.