Why it’s not always clear what an ordinary working week is and why agreement is important.

Your employees are entitled to at least four weeks paid annual leave and this is based on what genuinely constitutes a working week for the employee in question. Determining correctly what this is, is crucial for correctly calculating leave entitlements.

Sounds straightforward? For many employees it is. However, for other employees their work pattern is more complex. For example, some of your employees work according to a predictable pattern, but it does not fit into a seven day cycle. Other employees may not have a predictable work pattern at all and yet for many other employees work patterns have changed over time, which affects their entitlement to annual leave. Contract structures like working four days on, four days off, or an employee that may be regularly rostered on to work additional shifts or regularly works overtime, make it not straightforward how to define the working week for the purpose of determining annual leave entitlements. Disagreement around leave entitlements may arise in situations like these when it is debatable what typically constitutes a working week.

When it’s not clear how to meet the annual leave entitlement, employers and employees need to agree in good faith what the equivalent of an ordinary working week is. It is important to note that the Ministry of Business, Innovation & Employment (MBIE) states that “Whatever is agreed, keeping each employee’s annual holidays balance in weeks rather than days or hours is advised, because this is the unit provided for in the Holidays Act and the unit against which compliance will be measured”.

Regularly reviewing employees' work patterns, and having a discussion in good faith around holiday entitlements if you note changes, is essential to avoid non-compliance with the Holidays Act. The agreement around what an ordinary working week is and the impact on annual holidays and existing entitlements, should be recorded in writing and communicated to your payroll provider. Remember that when work patterns are regularly changing you may need to have a discussion in good faith every time the employee takes annual leave to agree on what portion of the four weeks’ annual holidays entitlement is being taken.

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