Top 3 mistakes around public holiday entitlements
The top 3 mistakes around public holiday entitlements that we come across when we review a client's payroll and HR processes for compliance with the NZ Holidays Act are:
Paying the Relevant Daily Pay (RDP) where Average Daily Pay (ADP) should have been applied. We often see that only RDP is configured in the payroll system, which can lead to incorrect payments for public holiday leave.
The ADP calculation is incorrectly calculated: When ADP is applied, the calculated pay may still not be correct because some payroll systems do not record the count of actual days worked, or default to using hours instead.
Excluding non-discretionary payments and productivity or incentive based payments from the public holiday pay. This is often because they are incorrectly left out of the gross earnings, which affects the calculations for ADP. Consideration should be taken as to whether payments should be added on for RDP.
These are just some of the issues that we see. The Holidays Act is complex and figuring out how to calculate leave entitlements correctly to comply is frustrating and confusing for many organisations. Any questions around public holiday entitlements? Ask us below in the comments section, we’re happy to help!
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