ëRelevant daily payí is a term used in the Holidays Act 2003. It is the amount that you have to pay employees when they have time off work for a public holiday, an ëalternative holidayí, sickness or injury, or for a bereavement.

By law, relevant daily pay must include certain components of the employeeís pay. Usually itís clear what a personís relevant daily pay is, but the Holidays Act 2003 states how it must be calculated on occasions when itís not clear.

The term ërelevant daily payí was not used in holidays legislation prior to the 2003 Act. The previous Act used the term ëholidays on payí. Note that the law can and does change quickly. The latest on holidays legislation can be found on www.ers.govt.nz.

An employee has to be given their relevant daily pay for time they take off work for:

• Bereavement leave (if theyíre entitled to it).

An employee who works on a public holiday which would otherwise be a working day for them is entitled to an alternative holiday. They are entitled to be paid for a full dayís alternative holiday, regardless of the actual number of hours they worked on a public holiday.

If an employee was on call on a public holiday and had to restrict their activities, they are entitled to an alternative holiday, even if they werenít actually called out.

If they were not required to restrict their activities and did not attend a call out, they are not entitled to an alternative holiday.

Relevant daily pay is the amount the employee would have been paid had they worked on the day in question.

Relevant daily pay includes:

• The cash value of any board or lodgings that the employer provides for the employee.

The Holidays Act 2003 says that relevant daily pay is the ëamount of pay that the employee should have received had the employee worked on the day concernedí.

Logically speaking, if they worked on a public holiday, they would have been paid time and a half. So it could be surmised that the relevant daily pay for someone who doesnít work on a public holiday is time and a half their normal rate.

This would defeat the aim of the compulsory time and a half rate ñ to compensate people for giving up their public holiday to work. For this reason, the Holidays Act 2003 states that relevant daily pay does not include the time and a half rate for working on a public holiday.

The Holidays Act 2003 allows employment agreements to specify a special rate of relevant daily pay. However, the amount specified must be at least what it would be if it was calculated under the Act.

Relevant daily pay is clear in many cases, but if itís not clear, the following calculation must be used:

b

where:

ëaí is the employeeís gross earnings for:

ëbí is the number of whole or part days during which the employee earned the earnings in the 4 calendar weeks (or longer, as the case may be), including any day on which the employee was on paid annual or other leave, but excluding any other day on which the employee did not work.

The employee has a salary of $40,000 per year, which divided by 52 equals $769.23 (gross) per week.

She works 5 days per week, so her weekly pay is divided by 5, making her relevant daily pay $153.85.

Example 1 - The employee works part-time and has a salary of $30,000 per year, which divided by 52 equals $576.92 (gross) per week. He works 4 days per week, Monday to Thursday, so his weekly pay is divided by 4, making his relevant daily pay $144.23.

However, if the public holiday falls on a Friday, or he needed sick or bereavement leave on a Friday, he would not be entitled to his relevant daily pay because he doesnít normally work on that day.

Example 2 - The employee works part-time and has a salary of $30,000 per year, which divided by 52 equals $576.92 (gross) per week. She works 6 hours per day, 5 days per week, so her weekly pay is divided by 5, making her relevant daily pay $115.38.

The employeeís daily pay varies because he is paid a piece rate, and is allowed to work as many hours as he wishes, so long as he works for at least 4 hours every weekday.

The end of the employeeís last pay period before Queenís birthday (7 June) is 4 June.

From 7 May 2004 until 4 June 2004, the employeeís gross earnings were $1650.

On 21 May, he took a day of unpaid leave.

The employeeís relevant daily pay would be as follows:

1650 = $86.84

19

where:

ëaí = $1650 (gross earnings)

ëbí = number of days during 4 calendar weeks (28), minus 8 non-work days (weekends), minus one day of unpaid leave = 19.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this fact sheet Items herein are general comments only and do not constitute or convey advice per se. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. We believe the contents to be true and accurate as at the date of writing but can give no assurances or warranty regarding the accuracy, currency or applicability of any of the contents. This fact sheet is made available to our clients as a helpful guide for their private information. Therefore it should be regarded as confidential and should not be made available to any person without our prior approval.

Copyright: No unauthorised copying permitted

HF183

Last updated August 2004