A farcical (but common) public holiday scenario, courtesy of the Holidays Act
November 17, 2014
Do you run a business where employees are paid by the hour and the hours of work can be variable? If so, due to the outdated view of working patterns in the Holidays Act, this can have a major impact on what your employees are entitled to receive on a public holiday.
Consider this scenario and whether it seems fair…
Arthur runs a painting company. The hours are up and down depending on the work and the weather. But the work’s coming in nicely at the moment so he employs Joe and Dave.
The week starts with some typical spring weather. They only get 4 hours on the job on Monday and Tuesday. They make up for it later in the week though, and both Joe and Dave have worked 40 hours by Friday.
Still, with the slow start at the beginning of the week they’re a tad behind. Arthur asks Joe and Dave if they can come in on Saturday morning for a couple of hours to finish off some touching up.
Dave turns up on Saturday morning. Joe had a big night on the town and isn’t fit for anything on Saturday morning. But Dave and Arthur manage to finish the job in two hours. When Arthur does the pay Dave gets paid for 42 hours and Joe 40.
The following Monday is a public holiday. Because their hours vary from day to day, Arthur’s going to pay the guys their average daily rate. But when he comes to calculate the pay for that week something doesn’t seem right. So he goes to the MBIE website and uses their tool to calculate the Average Daily Pay. Sure enough the calculations come out as follows:
Joe’s earnings: $1200. Days worked: 5 full days = $240 paid for the statutory holiday
Dave’s earnings: $1260. Days worked: 5 full and 1 part day = $210 paid for the statutory holiday
Hard luck Dave. He put in the extra effort to help out on the Saturday and is essentially being penalised for that because that part day is dragging down his average daily rate. As a result he’s getting paid the equivalent of an hour less than Joe on the public holiday.
There was a lot of press last week about the growth of zero hour’ contracts. These sort of Average Daily Rate calculations will be common in those contractual arrangements.
This anomaly stems from an overly prescriptive Act and that doesn’t take into account the working patterns of the many employees across many industries that work varied hours.
Suggestions by various parties to do all calculations in hours would certainly rectify the disparity in this particular example. It’s a start, but that approach will no doubt have it’s own imbalances as well.
We’ll consider some alternative options for BAPS (Bereavement, Alternate, Public Holidays, Sick) calculations in a later blog.
Next up in this series on the Holidays Act we’ll look at annual leave and holiday pay.
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