“As the ERA has indicated, an easy approach for a business to take [is] using ‘blanket rules’ to determine holiday entitlements [but this] isn’t the same as a lawful one,” says Tania Donaldson, payroll lead with the labour inspectorate.
Donaldson’s comments come after fast-food operator Wendco was reprimanded by the ERA for its use of a “three-week rule” when calculating holiday entitlements.
Under the rule, Wendco determined alternative holiday by assessing if an employee had worked on the same day of the week as the public holiday in the three preceding weeks.
“The use of a ‘three week rule’ by Wendco (NZ) Limited to work out entitlements around public holidays meant some employees were not being provided with their full entitlements, and the employer was not meeting their obligations under the Holidays Act,” says Donaldson.
“To work out an employee’s rights to an alternative holiday, you need to know whether the day is an ‘otherwise working day’ for the employee,” she continues.
“Working out whether the day is an ‘otherwise working day’ is a practical task, and each situation needs to be considered based on the employee’s specific situation and work pattern, where employers consider and apply all of the factors of s12 of the Holidays Act where they are relevant.”
If it’s unclear whether the day is an ‘otherwise working day’, organisations may have to consider what’s included in the employment agreement, the employee’s usual work patterns, what the rosters say, whether the employee would normally have worked, and any other relevant factors.
“Employers who configure their payroll system in a way that is convenient to themselves without proper regard to their obligations run a high risk of being non-compliant,” warns Donaldson.
“While these considerations may require additional effort for some businesses, this is the law and they must abide by it,” she continues.
“If any employer has breached their obligations through the use of such blanket rules, they must fix their processes to prevent future breaches, and ensure they pay their employees what they’re owed for past breaches.”
Major airline slips up over annual leave
Does the Holiday Act 2003 provide challenges for you?
Planning for annual leave over the Christmas period can cause major headaches for HR and some employers adopt blanket rules as a way of easing the pain – however, while the approach may be simpler, it’s not necessarily lawful.