What is Statutory Holiday Pay (NZ)?

Statutory Holiday Pay in New Zealand constitutes the compensation that employees are entitled to for time off on public holidays. This pay is regulated by the Holidays Act 2003. It provides that if an employee works on a public holiday, they are paid a minimum of time and a half for the time worked.

Additionally, if the public holiday falls on a day that would normally be a working day for the employee, they are also entitled to an alternative holiday (a day in lieu). This provision ensures that employees are fairly compensated for working during national holidays when they would otherwise have time off.

For those who do not work on the public holiday but the holiday falls on their usual working day, they are still entitled to their relevant daily pay or average daily pay for that day. This payment is part of New Zealand’s commitment to balance work with rest and ensure that employees can take part in national celebrations or have downtime without any financial loss. 

It is worth noting that there are specific calculation methods to determine what constitutes a ‘usual working day’ for a given employee, which employers must adhere to when computing holiday pay.

How is Statutory Holiday Pay Calculated?

In New Zealand, statutory holiday pay calculations are governed by the Holidays Act 2003, ensuring that employees receive correct entitlements for public holidays, alternative holidays, sick leave, and bereavement leave. 

Here is a basic guide on how it is typically calculated.

Public Holidays

If the employee works on a public holiday, and it’s a day they would usually work, they are entitled to be paid at least time and a half for the time worked on that day. If the public holiday falls on a day they normally work, they are also entitled to a paid alternative holiday (commonly known as a “day in lieu”).

The calculation for a Public Holiday:

• For an hourly worker: Pay at least 1.5 times their regular hourly rate for the actual hours worked.
• For a salaried worker: If the public holiday falls on a day they would otherwise work, they would receive at least their normal pay (but if they work, they should still receive at least time and a half).

Alternative Holidays (Formerly Called Day in Lieu)

When an employee works on a public holiday that would otherwise be a working day for them, they are entitled to another day off on full pay. The pay for the alternative holiday is calculated in one of the following ways –

• Relevant daily pay: The amount the employee would have earned if they had worked on the day.
• Average daily pay (if applicable): An average of the employee’s daily earnings over the past year. This can be used if it’s not possible or practicable to determine relevant daily pay or if the employee’s daily pay varies within the pay period where the holiday falls.

Annual Holidays (Vacation Leave)

Employees in New Zealand are also entitled to four weeks of paid annual holidays after each 12 months of continuous employment. The pay for annual holidays is the higher of –

• Ordinary weekly pay at the start of the annual holiday, or
• Average weekly earnings over the 12 months just before the end of the last payroll period before the annual holiday.

Again, these are general guidelines based on the Holidays Act 2003. However, specific situations and employment agreements may have different provisions as long as they are as favorable as the statutory requirements or more. Employers must keep accurate records and perform the correct calculations to ensure compliance with the law.

Given that the law and its interpretations can be complex and subject to change, always check the latest resources or consult with a legal expert for up-to-date and specific advice.

Which Days are Public Holidays in New Zealand?

New Zealand has several recognized public holidays, including – 

• New Year’s Day
• Waitangi Day
• Good Friday
• Easter Monday
•  ANZAC Day
• Queen’s Birthday
• Labour Day
• Christmas Day 
• Boxing Day

The specific dates for some holidays change each year, while others stay fixed.

In Cases Where a Public Holiday Falls on a Weekend

If a public holiday is on a weekend and you don’t normally work weekends, you will get the next Monday off. If that Monday is also a holiday, you will get Tuesday off instead. This is for people who work from Monday to Friday

This ensures that full-time workers still receive the benefit of the public holiday.

Additional Provisions and Considerations

• The Act also provides provisions for closed downs, whereby a business may close for a certain period (usually around Christmas and New Year) and requires employees to take their paid leave.
• Employers and employees must be clear on the terms in their employment agreement about how public holiday entitlements are determined.

Ensuring Compliance with Statutory Holiday Pay Regulations in New Zealand

An international payroll management company like us at Tarmack, can provide invaluable assistance to businesses in adapting to the complexities of Statutory Holiday Pay in New Zealand by ensuring compliance with the Holidays Act 2003. 

Our knowledgeable and expansive team is adept at calculating the correct entitlements for employees, including recognizing public holidays, understanding the intricacies of “otherwise working days,” and ensuring employees are compensated for time off, among other factors. 

We also help businesses avoid costly legal mistakes and administrative burdens while ensuring a smooth payroll process for both domestic and international employees.