This concept is important because it determines whether a person who does not work on a public holiday receives payment for the day, and also whether a person who does work on the public holiday is entitled to an alternative holiday (day in lieu).
For most employees, deciding whether a public holiday falls on a day that would otherwise be a working day for that employee will be an easy task. If the person’s working hours include, for example, Mondays, and Labour Day falls on a Monday, the employee will receive payment for the public holiday – that is, they will not work, and will be paid their relevant daily pay.
However, for an employee who works variable hours, or for a casual employee who is engaged on an ‘as and when required’ basis, the task is not so simple. For these sorts of employees, figuring out what would be an otherwise working day needs to be assessed on an employee by employee basis.
Section 12(2) of the Holidays Act 2003 provides that if it is unclear whether the day would otherwise be a working day for the employee, the factors that the employer must consider include:
- What the employment agreement says;
- The employee’s usual work patterns;
- Any other relevant factors such as if the employee works for the employer only when work is available or the employer’s rosters or other similar systems; and
- Whether, but for the day being a public holiday, the employee would have worked on the day concerned.
Some employers will look at whether the employee worked on the day in question for a set number of weeks leading up to the public holiday. If the public holiday falls on a Monday and the employee has not worked, for example, the last 4 Mondays, the employer deems that the public holiday would not otherwise be a working day for that employee. This can be a setting in the payroll system.
For reasons of simplicity and convenience, it is easy to see why an employer would prefer a strict mathematical formula that is automated in the payroll system. However, an automated rule may not comply with the Holidays Act, as illustrated in Wendco (NZ) Limited v Labour Inspector of MBIE.
In Wendco, the Employment Relations Authority found that the employer’s rule – a three week assessment automatically applied by the payroll software – restricted or reduced some employees’ entitlements to alternative holiday days and created a risk of targeted rostering.
The Authority said that there was no ‘one size fits all’ answer to the question of what period the employer’s assessment needed to cover, although it would be “considerably longer than the preceding three weeks”. The Authority expressed a view that 12 months would be too long, but a three to six month period might be a reasonable time over which to assess all of the factors set out in s12(3). However, the emphasis was on a genuine consideration of the factors, rather than a rigidly applied, or automated rule.
The Authority considered and rejected the employer’s argument that assessing each person individually would be prohibitively expensive and time-consuming, and might mean closing on public holidays or charging a surcharge. The Authority said these were not considerations that needed to be taken into account. In other words, the legislation does not provide concessions for employer inconvenience. The Authority concluded that “An individual employee approach is simply part of the price Wendco pays for the benefit of the convenience it gains by using variable rosters”.
It is clear that the Authority is interested in compliance, not convenience. The employer must turn its mind to a genuine consideration of the factors, rather than a blanket rule.
If you have any questions about how this might apply in your business, please do not hesitate to give us a call.