I have a casual employee who has recently become a permanent employee. How do I change their holiday pay from 8% each pay?
Section 28 of the Holidays Act 2003 allows for the payment of holiday pay to be included in a casual employee's regular pay under certain circumstances.
This FAQ explains what to do if an employee in the above circumstances subsequently becomes a permanent employee.
From the Employee Maintenance screen, select the employee, select the leave page, then select holiday pay. The following screen is shown.
Note the setting of Min % Each Pay. Change it to Annual Leave - Entitlement and then click GO
From the Employee Holiday Pay Entitlement screen shown below, scroll down to Step 3 Enter Opening Entitlements.
In the Opening Entitlement Date field enter the date on which the employee became permanent.
Ensure the Opening Entitlement Days Owing field shows None.
The employee now accumulates holiday pay from the date entered.
(1) Despite section 26 , an employer may regularly pay annual holiday pay with the employee's pay if
(a) the employee
(i) is employed in accordance with section 66 of the Employment Relations Act 2000 on a fixed-term agreement to work for less than 12 months; or
(ii) works for the employer on a basis that is so intermittent or irregular that it is impracticable for the employer to provide the employee with 4 weeks' annual holidays under section 16; and
(b) the employee agrees in his or her employment agreement; and
(c) the annual holiday pay is paid as an identifiable component of the employee's pay; and
(d) the annual holiday pay is paid at a rate not less than 8% of the employee's gross earnings.
(2) If an employee to whom subsection (1)(a)(i) applies is employed by the same employer beyond 12 months on a series of fixed-term agreements of less than 12 months each, the employer and employee may agree that the employee is to be paid in accordance with subsection (1) regardless of the number of agreements.
(3) If the fixed-term agreement of an employee to whom subsection (1)(a)(i) applies is followed by permanent employment with the same employer, the employee
(a) becomes entitled to paid annual holidays at the end of 12 months' continuous employment (including the period of that fixed-term agreement) under section 16; but
(b) the amount of the holiday pay that the employee is entitled to be paid for the holidays is reduced by the amount that the employee has already received under subsection (1).
(4) If an employer has incorrectly paid annual holiday pay with an employee's pay in circumstances where subsection (1) does not apply and the employee's employment has continued for 12 months or more, then, despite those payments, the employee becomes entitled to annual holidays in accordance with section 16 and paid in accordance with this subpart.
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