5 Tips to Avoid Holiday Pay Drama

frustration with holiday pay

Are you dreading your staff complaining about their holiday pay? Here are some ways to avoid the pitfalls. Holiday Pay can cause a lot of stress and so learning some simple rules can help smooth the way to better employee relations. 

For example; Annual Leave holiday pay is treated differently from Public Holiday pay and so you cannot assume that paying the normal weekly or daily amount will be correct. The way this must be calculated is that the average weekly rate over the previous 12 months, or the regular weekly rate can be paid - whichever is the higher. 

Here are some simple tips to keep in mind:

  1. Set up your systems correctly. You must load 52 weeks of historical pays for each employee to get the average rate.
  2. Keep accurate records, record sick leave taken, days absent without leave, conversations about performance or misconduct. Don’t fudge it.  7 years records are required by law.
  3. Make sure all staff have a comprehensive Employment Agreement and update with any changes to the law.
  4. Set up a simple file for each employee. Keep notes of changes there or in your payroll program.
  5. Keep track of hours worked if they fluctuate. Require staff to fill in time sheets.
  6. Annual Leave, and Bereavement, Sick and Public Holidays are not calculated the same way - get familiar with the rules.

Here is an excerpt from an excellent article by Jess Logan:

"The purpose of the Holidays Act is to promote a balance between work and employees’ personal lives and provide employees with minimum entitlements to:
  • Annual holidays to provide the opportunity for rest and recreation
  • Public holidays for the observance of days of national, religious, or cultural significance
  • Sick leave to assist employees who are unable to attend work because they’re sick or injured, or because someone who depends on the employee for care is sick or injured
  • Bereavement leave to assist employees who are unable to attend work because they have suffered a bereavement

to read more go to -https://www.myob.com/nz/blog/holiday-pay-why-do-businesses-get-it-wrong/

90% of the calls we get regarding payroll relate to holiday pay. Good record keeping, utilizing a payroll software program, and being up to date with current legislation goes a long way towards having a stress free payroll.

    Lynley Averis

    Lynley is an MYOB Certified Consultant & has been involved in training in New Zealand since 1985. She's written various accounting & MYOB workbooks including co-authoring “Bookkeeping for Dummies”. She has consulted on all versions of MYOB Accounting, Retail and Payroll over the past 18 years and has previously worked for MYOB. She currently consults to NZ businesses on all aspects of business systems - her mission for clients is for them to spend as little time as possible doing accounting!