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Public Holidays causing chaos when processing your payroll?

Recently the Employment Relations Authority (“ERA”) found that Wendy’s fast food restaurant (“Wendco”) had been miscalculating what an ordinary working day is for their Employees. Wendco operate 23 restaurants across New Zealand, and have a rotating/flexible roster which means that an Employee may not work the same hours and days every week.

As for all Employer’s when an Employee works a public holiday, an Employer has to determine whether the public holiday worked would otherwise be a normal working day for that Employee, and whether an alternative day is owed.

When determining whether an alternative day was owed, Wendco adopted the approach to look at the previous three (3) working weeks to determine if the public holiday worked was a normal working day for the Employee. This approach was engrained in the Wendy’s payroll system and all Employees were made aware or knew about this method of calculation.

The ERA found that this method of determining what would otherwise be a normal working day for an Employee was too narrow and was in breach of the Holidays Act 2003 (“HA”) as it acted to restrict or reduce an Employee’s entitlement to an alternative working day. The ERA made it clear that section 12 of the HA was intended to be applied practically and should be looked at separately in light of the work patterns around it. 

Therefore the ERA recommended that Wendco should look at the previous three (3) – six (6) months worked to determine whether an alternative day was owed. The ERA further stated that an Employer should also look as to why the Employee did not work on any given day throughout that three (3) – six (6) month period – i.e whether it was due to the roster or if they were off sick etc.

A number of Employers work on a rotating/flexible roster system where their Employee’s hours and days of work are ever changing. Therefore Employers who use this kind of roster system should exercise caution when determining whether an Employee is entitled to an alternative day when working a public holiday.

To determine what would otherwise be a normal working day for an Employee, the Employer will have to look at the previous three (3) – six (6) month period. This means that an Employer will need to keep an accurate record in respect of the hours and days worked by each of their Employees or establish this method of calculation within their payroll system.

If you require any assistance in respect of any holiday pay calculations, including public holiday calculations, please feel free to give our team a call on 07 823 0105.