Holiday, wages, parental leave and tax issues


Annual Leave

Under the Holidays Act, every employee is entitled to a minimum of four weeks’ annual leave per year, exclusive of public holidays. Employees must be given the opportunity to take two of the four weeks as continuous holidays if they wish to.

However, for employees on a fixed term contract for a period less than 12 months, or those whose work is so intermittent and irregular it is impractical to give the four weeks’ paid annual leave, an employer may treat annual leave differently. In this case most employers will include holiday pay (8% on top of your pay) into the employee’s pay packet, and identify this separately on your pay slip. This can only be done it is permitted in the employee’s employment agreement.

Trading holidays for pay

Employers cannot require an employee to “cash in” their leave, nor can they make it a term of the employment agreement that the employee will or will request to cash in their leave. Annual leave can only be traded for pay at the employee’s request and the request must be in writing.

Once a written request to trade leave for pay is received from the employee, the employer must, within a reasonable time, respond to the request in writing. The employer may decline the request and, if it so wishes, may implement a workplace policy that they will not consider any requests to cash in leave.

How much will employers have to pay for leave cashed in? Employers will pay employees the greater of (a) their weekly pay “at the beginning of the annual holiday”; or (b) the average of their weekly earnings for the 12 months prior to “the annual holiday”. It is not clear from the legislation how to calculate the beginning of the annual holiday where an employee is paid out. However, the most practical approach would be to consider the date of payout as the date the annual holiday begins.

Public Holidays

Public holidays (colloquially “stat days”) include Christmas, Good Friday, Easter Monday and Labour Day among other days. Employees are entitled to a paid day’s leave if they work on a public holiday.

For Christmas, Boxing Day, New Year’s Day and 2 January, if the holiday falls on a weekend and an employee does not normally work over the weekend, the holiday is transferred to the following Monday or Tuesday. If the employee normally works on the weekend, the public holiday will remain unchanged.

Working on a Public Holiday

Employers can require employees to work on a public holiday when the public holiday falls on a day the employee would normally work and the employee’s employment agreement specifies they will work that day. Employees who work on a public holiday are entitled to be paid one and a half times their normal pay (whether they are salaried or waged). They are also entitled to a day in lieu.

Transferring holidays

Employees and employers can agree to transfer observance of a public holiday to another calendar day (the “transfer day”).

Both the public holiday and the transfer day must otherwise be a working day for that employee. For example, consider an employee who normally works Monday to Friday. Where Christmas falls on a Monday the employee may transfer observance of Christmas to the following Monday but cannot transfer observance to the following Saturday.

Unlike trading annual leave for pay, it is not essential the employee make a written request before observance of a public holiday can be transferred. However, any agreement to transfer observance of a public holiday must be in writing, although it may be included in the employment agreement for that employee. The agreement must identify both the public holiday and the transfer day.

One notable consequence of the amendment is that, depending on the circumstances, an employer may not be required to pay the employee time and a half and provide them with a day in lieu where there is an agreement to transfer observance of the public holiday.

For more information on holidays, please make an appointment to meet with us.