We often hear our clients say they are 'doing the wages' or 'paying the wages'. Anyone involved in payrolls know there is a heck of a lot more to it than that!
You are the Payroll Manager of your business and keeping informed and aware of your obligations is a big responsibility. Good staff are one of your biggest assets, so before the festive season kicks in, put your Payroll Manager hat on and let's have a refresh on your obligations in regards to Holiday Pay and Entitlements.
Holiday pay and entitlements
Employees are entitled to a paid day off on a public holiday if it would otherwise be a working day.
Under Mondayisation legislation, public holidays that fall on the weekend can be 'moved' to the following Monday or Tuesday.
The Mondayisation legislation states that:
•If one of the Christmas or New Year public holidays falls on a Sunday, and the employee normally works on Sunday, the public holiday will be on the Sunday for that employee
•If one of the Christmas or New Year public holidays falls on a Sunday, and the employee does not normally work on a Sunday, then that public holiday will be observed on the following Tuesday for that employee
This year both Christmas Day (25th December) and New Year's Eve (1st January) fall on Sunday, and Boxing Day (26th December) and New Year Holiday (2nd January) fall on a Monday.
If an employee would normally work on the Sunday which the holiday actually falls their public holiday benefits will apply to that Sunday calendar date.
If an employee does not normally work on a Sunday, then the employee's public holiday will be moved to the next Tuesday (27th December and/or 3rd January).
Where employees work both the Sunday and the possible Tuesday, they will receive their public holiday benefits for the Sunday. They are not entitled to two public holidays for each occasion. This can mean that the holidays fall on different days for employees who have different work patterns.
https://employment.govt.nz/leave-and-holidays/public-holidays/
Annual close down and employed for less than a year?
Many businesses have an annual close down during the Christmas period, when employees have to take time off, even if they don't have any annual leave. If public holidays fall inside your annual closedown period, you must pay employees for them if they're on days they'd usually work.
If you have an employee who has been in the job for less than 12 months, they still have to take time off during an annual shutdown. Check out the MBIE – Ministry of Business Innovation & Employment for specific details. Remember – you must give employees 14 days' notice of the closedown.
https://employment.govt.nz/leave-and-holidays/annual-holidays/annual-closedowns/
Taxing Holiday Pay paid in a lump sum
In situations where holiday pay is paid as a lump sum in addition to the employee's regular pay in a pay period, the holiday pay will be taxed as an extra pay.
http://www.ird.govt.nz/payroll-employers/make-deductions/staff-benefits/bonuses/emp-ded-bonus-lump-sum.html
Calculating payment for annual leave
Payment for annual holidays is paid at the higher of the ORDINARY WEEKLY PAY at the time the holiday is taken OR the employee's AVERAGE WEEKLY EARNINGS over the 12-month period before the annual holiday is taken.
https://employment.govt.nz/leave-and-holidays/calculating-payments-for-leave-and-holidays/
Merry Christmas from the A4 Payroll team!
Payroll team at Accounted4
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
Kathryn Leong Extn. 859
You are the Payroll Manager of your business and keeping informed and aware of your obligations is a big responsibility. Good staff are one of your biggest assets, so before the festive season kicks in, put your Payroll Manager hat on and let's have a refresh on your obligations in regards to Holiday Pay and Entitlements.
Holiday pay and entitlements
Employees are entitled to a paid day off on a public holiday if it would otherwise be a working day.
Under Mondayisation legislation, public holidays that fall on the weekend can be 'moved' to the following Monday or Tuesday.
The Mondayisation legislation states that:
•If one of the Christmas or New Year public holidays falls on a Sunday, and the employee normally works on Sunday, the public holiday will be on the Sunday for that employee
•If one of the Christmas or New Year public holidays falls on a Sunday, and the employee does not normally work on a Sunday, then that public holiday will be observed on the following Tuesday for that employee
This year both Christmas Day (25th December) and New Year's Eve (1st January) fall on Sunday, and Boxing Day (26th December) and New Year Holiday (2nd January) fall on a Monday.
If an employee would normally work on the Sunday which the holiday actually falls their public holiday benefits will apply to that Sunday calendar date.
If an employee does not normally work on a Sunday, then the employee's public holiday will be moved to the next Tuesday (27th December and/or 3rd January).
Where employees work both the Sunday and the possible Tuesday, they will receive their public holiday benefits for the Sunday. They are not entitled to two public holidays for each occasion. This can mean that the holidays fall on different days for employees who have different work patterns.
https://employment.govt.nz/leave-and-holidays/public-holidays/
Annual close down and employed for less than a year?
Many businesses have an annual close down during the Christmas period, when employees have to take time off, even if they don't have any annual leave. If public holidays fall inside your annual closedown period, you must pay employees for them if they're on days they'd usually work.
If you have an employee who has been in the job for less than 12 months, they still have to take time off during an annual shutdown. Check out the MBIE – Ministry of Business Innovation & Employment for specific details. Remember – you must give employees 14 days' notice of the closedown.
https://employment.govt.nz/leave-and-holidays/annual-holidays/annual-closedowns/
Taxing Holiday Pay paid in a lump sum
In situations where holiday pay is paid as a lump sum in addition to the employee's regular pay in a pay period, the holiday pay will be taxed as an extra pay.
http://www.ird.govt.nz/payroll-employers/make-deductions/staff-benefits/bonuses/emp-ded-bonus-lump-sum.html
Calculating payment for annual leave
Payment for annual holidays is paid at the higher of the ORDINARY WEEKLY PAY at the time the holiday is taken OR the employee's AVERAGE WEEKLY EARNINGS over the 12-month period before the annual holiday is taken.
https://employment.govt.nz/leave-and-holidays/calculating-payments-for-leave-and-holidays/
Merry Christmas from the A4 Payroll team!
Payroll team at Accounted4
Anne Bland Extn. 831
Carolyn Lawrence Extn. 837
Maree Craig Extn. 825
Kathryn Leong Extn. 859
