Business mentor: Working on a public holiday

Q. I've got staff working on the Christmas/New Year public holidays and other staff who would normally work on those days on holiday. Who is entitled to be paid for what days?

Small business sector specialist Sarah Trotman asked David Lowe, manager of employment relations services for the Employers & Manufacturers Association, for some advice on holiday pay:

A. The Holidays Act 2003 requires employers to pay their staff for a public holiday if it falls on a day on which they would normally have worked.

Employees who do not work because it is a public holiday must be paid at their relevant daily pay, which is defined as the amount they would have received had they worked on the day concerned.

In most cases, it will be easy to decide if a day is deemed to be a working day for the purposes of the Act.

Boxing Day falls on a Monday this year and if an employee always works on Mondays, he or she is entitled to be paid for the day off.

In some cases it will be more difficult to determine what would otherwise be a working day, in the parlance of the law. Where it is not clear, employers and employees need to try to reach an agreement by considering factors such as their employment agreement, work patterns, rosters, whether the employee only works for the employer when work is available, and the reasonable expectations of the parties that the employee would work on the day.

However, there are additional rules this year for Christmas Day and New Year's Day, which fall on a Sunday.

If Sunday is otherwise a working day for a particular employee, that day will be his or her public holiday.

For everyone else, if Sunday is not otherwise a working day, (it's not for Monday to Friday workers) then the public holiday transfers to the following Tuesday.

However, employees are only entitled to be paid if the Tuesday would otherwise have been a working day. This means, an employee who would not usually work the Sunday or the Tuesday is not entitled to be paid for that day off.

Employees are only entitled to the benefits of a public holiday once - they are not entitled to more than four public holidays over the Christmas and New Year period.

If employees work on a public holiday, they must be paid for the time actually worked, in accordance with section 50 of the Holidays Act 2003. This states: an employer must pay the employee who works on any part of a public holiday the greater of the portion of the employee's relevant daily pay (less any penal rates) that relates to the time actually worked on the day plus half that amount again or the portion of the employee's relevant daily pay that relates to the time actually worked on the day.

A penal rate is an identifiable additional amount that is payable to compensate the employee for working on a particular day of the week or a public holiday but does not include any additional payment for a sixth or seventh day of work.

For example, if an employee is always paid a penal rate of double time for the time worked on a Sunday and a public holiday falls on a Sunday, the employer will have to pay double time as per the employment agreement.

If an employee works on a public holiday that is otherwise a working day then he or she must be given an alterative holiday in the future, referred to as a day in lieu.

An employee who works on a public holiday that is not otherwise a working day must be paid the extra public holiday payment for the time worked, but does not get an alternative holiday.

* Specific issues may relate to your particular business circumstances, so if you need advice you should call EMA's adviceline.