(NZ) Dangers of the Holidays Act

(NZ) Dangers of the Holidays Act

Compliance with the Holidays Act is simple when an employee works standard hours each week and is paid a normal salary. However, things can get complicated pretty quickly when there is overtime or additional payments beyond a simple salary structure. 

In this blog, we explain how a clear understanding of the Act and accurate use of the Datacom system will work towards reducing processes and timelines in the time around payday.

About the Holidays Act

When you read through the Holidays Act it tells you what you should be doing, but when applying that to the business it can be practically difficult. This is definitely the case of theory versus practice and expert advice ought to be sought out - the Act has to apply to every business but every business is different in the way it runs and provides holiday and leave to employees. Employers need to understand the accrual and calculation of holidays and leave and how that then applies to their business.

There are numerous aspects of the Holidays Act that could catch an employer out - the calculation of Relevant Daily Pay and Average Daily Pay for sick leave, bereavement leave, alternative holidays, and public holidays would appear at the top of the list. The other is the accrual of annual holidays when the employee goes on parental leave, and what they are entitled to in terms of payment if they take further leave after they return to work.

The consequences of getting calculations wrong can be severe. The most widely published example is the case of NZ Post where the Supreme Court found that they had incorrectly paid certain leave types using Relevant instead of Average Daily Pay. NZ Post were then required to make remediation payments for current and ex-staff going back many years.

Datacom’s payroll software will correctly calculate leave payments, but only if it is used correctly. Employees need to be set up correctly, particularly their normal work patterns, and these settings need to be updated if the employees’ work patterns change. All of the various payment types made to staff must also be correctly included or excluded in the calculations, depending on their nature.

We have standard reports that are specifically designed to highlight employees who may be configured incorrectly. We have also recently undertaken a large project where we have worked with our DataPay and EasiPay clients to ensure that they are using our software correctly, and are thereby complying with the requirements of the Holidays Act.

Accurate use of the Datacom Payroll system will enable the payroll manager to accurately track the varied types of holiday pay made to staff. It also helps to avoid the pitfalls of inaccurate calculations for both the company and individual, which in turn leads to contented staff and a stress-free payroll manager. This system will not only help your organisation navigate the pitfalls of inaccurate calculations, it'll also ensure that you comply with the Act. Contact us to learn more.

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