The fact that the Holidays Act is made up of relatively simple concepts and is explained in simple terms belies both the complexity and the dangers to employers contained within this 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.
Compliance 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.
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.