Average Daily Pay

In New Zealand, the Holidays Amendment Act 2010 states that sick leave, alternative leave, bereavement leave, and public holidays worked must be paid at the employee's Relevant Daily Pay (RDP) rate if possible, otherwise payment must be made at the employee's Average Daily Pay (ADP) rate.

An employee's ADP rate is:

Gross earnings for previous 52 weeks / Number of days worked in previous 52 weeks

Gross earnings for ADP

Employees who work on a public holiday get paid time and a half, but the ‘half’ portion is not included in the gross earnings for ADP. If you currently use a "Public Holiday Worked" allowance with Factor = 1.5000, then the entire allowance amount is included in the allowance group used to calculate the ADP rate, such as "AVEARN". As a result, the employee’s ADP rate may be slighter higher than the minimum required by law.

Note: The Department of Labour is unlikely to penalise companies that use this type of setup because the higher calculated rate is to the employee's advantage.

If you want ADP calculations to use the minimum legislated amount, then you need to create:

• A non-paying allowance that you can use in a payroll rule to reduce the "Public Holiday Worked" amount by 0.5.
• A payroll rule that will create a negative, non-paying allowance transaction when the pay contains a "Public Holiday Worked" allowance.

Create non-paying allowance

1. Create a non-paying allowance with the following values:

   Type: A. Allowance

   Rate: Must use same Rate as the "Public Holiday Worked" allowance

   Calculation method: F. Fixed or Q. Quantity

   Paying: No

   Taxable: No

   Factor: 0.5000

   Note: Allowances cannot contain negative Factor values so the payroll rule will multiply the counter allowance quantity by -1.

2. Include the non-paying allowance in the allowance group used to calculate the ADP rate, such as AVGEARN.

Create payroll rule

1. Create a payroll rule to generate the non-paying allowance transaction.

   Qualifying clause will action the payroll rule when the pay contains a "Public Holiday Worked" allowance, which has Code = 010 in this example:

   Quantity of at least one allowance of "010" is not equal to 0

   Action clauses will create a negative, non-paying allowance transaction, which has Code = 308 in this example:

   Post sum of allowance quantities for "010"1

   • Fields: Post a field to an accumulator detail
   • Fields: Post sum of allowance quantities for <> to accumulator
   • Select Allowances: 010 PH Worked hours
   • Values: Post sum of allowance quantities for "010" = 1

   Multiply accumulator 1 by a quantity of -1

   • Fields: Post an accumulator detail
   • Fields: Multiply accumulator
   • Values: Multiply accumulator = 1 by a quantity of = -1.0000

   Post allowance quantity from accumulator 1

   • Fields: Post an allowance detail
   • Fields: Post allowance quantity from accumulator
   • Values: Post allowance quantity from accumulator = 1

   Create allowance from posted details to "308"

   • Fields: Create allowance from posted details to
   • Select Allowances: 308 Reduce Extra on PH for ADP

   Reset all posted accumulator details

2. Attach the payroll rule to the relevant awards, periods and internal companies. Use the appropriate Evaluate rule before value, such as "Z. Finalisation".

Result

When you process a pay that contains an employee with a PH worked hours transaction, the payroll rule (ADP_PH1.5) creates a negative transaction (308) for the 'half' (Factor = .5000) portion of the PH worked hours transaction (Factor = 1.5000). The negative transaction (308) is non-paying so processing automatically generates a contra transaction.

When you close the pay, the employee's average earnings UDA breakdown will include only the nett '1.0' value of the PH worked hours transaction because the average earnings allowance group (AVGEARN) contains the 010 PH worked hours allowance (Factor = 1.5, Total = 451.85) and the 308 Reduce Extra on PH for ADP allowance (Factor = 0.5, Total = -150.62). As a result, the calculation of gross earnings for ADP will be based on the correct minimum amount.