Holiday season payroll & employment law: getting it right!

Date: 15th December 2019

The holiday season is supposed to be a joyous time of year filled with friends, family and celebrations. However, if you’re a business owner and particularly an employer, just like Santa trying to navigate his way through a snow storm on Christmas Eve, navigating your way round holiday employment law and payroll can be challenging. There are rules around annual leave, statutory holiday payments, days in lieu, Mondayisation, annual closedowns and more to think about!

Thankfully there is some useful information out there that will help guide your sleigh this Christmas!

business woman in santa hat

Our friends at Xero have answered some common questions around payroll during the Christmas/New Year period including how to work out leave allowances, public holiday payments and file payroll in advance. This is specifically targeted at those businesses using Xero Payroll. Read Xero’s article on getting your payroll sorted here.

In addition, we recommend checking out Employment NZ‘s five point guide to answering common misconceptions in employment law related to the holidays. Here it is:

1. Is closing down a workplace for a specific period lawful?

Yes. Employers may close down a workplace if the process is managed lawfully.

An employer may have a regular closedown once a year and this is common over the Christmas/New Year period. Employees, who are entitled to annual holidays at the time of a closedown, are required to take annual holidays or other leave arrangements. The closedown can apply to part or all of the business, but employees must be given at least 14 days’ notice.

Whether employees should be paid depends on a number of factors, including whether they have built up enough annual holidays, or if agreed, they can take annual holidays in advance or unpaid leave.

Read more about annual closedowns

2. Should employees working a public holiday always get time and a half, plus an alternative day off?

No. Employees working on a public holiday should always be paid time and a half. However, they only get an alternative holiday (a paid ‘day in lieu’) if the public holiday they worked was a day that they normally worked, (i.e., an ‘otherwise working day’ for them), unless the employee only works on public holidays. Therefore, not all employees working public holidays are entitled to an alternative day off.

When a public holiday falls on a Saturday or Sunday, and this is a day the employee does not normally work, then an employee’s public holiday might be moved to the following Monday (or in some cases Tuesday).

For example, an employee who normally works weekends is required to work on Christmas Day this year, Wednesday 25 December. As this is not a normal working day for them, they don’t get an alternative holiday, but still get paid time and a half. However, if the Wednesday was their normal working day, they would also get an alternative holiday.

Read more about public holidays

3. Can employers refuse a request when their employees ask to take their annual holidays?

Yes. Employers and employees should try to work out annual holiday arrangements that are acceptable for both parties. For example, an employee might request to take two of their four weeks’ annual holidays over the Christmas break for an extended family holiday.

Employees may need to take holidays for important and legitimate personal, family and community responsibilities and employers must give their employees the opportunity to take at least two of the four weeks’ annual holidays continuously. This rule is to ensure staff are given an extended opportunity for rest and recreation at least once a year.

However, an employer also has the right to run their business as well, eg to ensure that they have enough staff to continue to operate. The key point here is that the employer must have fair and reasonable grounds to refuse a request to take annual holidays at the requested time.

On those occasions when both parties can’t reach agreement about the timing of employees’ annual holidays, then the employer can decide the dates, providing they are being fair and reasonable. However, the employee must be given at least 14 days’ notice to take annual holidays on those specified dates.

Read more about annual holidays

4. Do employers have to provide their employees with annual holidays in advance?

No. Employees don’t have a minimum legal right to take annual holidays in advance before they complete one year of work. If an employer provides this, it is at their discretion.
All employees become entitled to at least four weeks’ annual holidays after 12 months of continuous employment.

However, it is also common for some employers to allow their staff to take annual holidays in advance, even when they haven’t “accrued” enough days. “Accrued” is like a balance that staff have accumulated since they started working for a business. However, there is no legal requirement for an employer to provide annual holidays in advance.

Read more about taking annual holidays in advance

5. Can employees cash-up all their annual holidays during their employment?

No. Employees can ask to be paid out up to one week’s worth of annual holidays per year for each entitlement year, but the employer can say no to the request. If the employer agrees, employees must not cash-up more than one week’s worth of annual holidays per year for each four weeks’ holiday.

For example, an employee might want extra money for Christmas gifts and expenses and want to cash-up some of their annual holidays’ balance. The employee must have completed 12 months’ employment and make the request in writing. The employer must reply in writing and doesn’t have to give a reason for their decision.

An employer can also opt out of having to consider such cash-up requests by stating this in a workplace policy or employment contract.

Also, an employer cannot force an employee to cash up a portion of their annual holidays, if the employer has not been given a written request from the employee. In this case, the employee can keep both the cash up money and still take the portion of annual holidays cashed up as paid holidays. The employer may also face a penalty.

Read more about cashing up annual holidays

Need help?

If you need help with payroll for the holiday season, please get in touch.



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