Summary

Where an employee has outstanding days of their annual holiday entitlements remaining when their employment ends, the unused annual holiday entitlement must be notionally added to their last day of employment. If a statutory public holiday falls within this period, and on a day that the employee would otherwise have worked, then the employee must also be paid for this day.

An employee would not be entitled to a public holiday after the date of termination if the employee had not completed a full year of service for the employer as they would not have become entitled to any annual leave days.

As of March 2016, public holidays paid out on termination are now taxed as Extra Pay, as per the IRD requirements.

(NZ Holidays Act 2003, Section 40)

PayGlobal Functionality

PayGlobal uses the following functionality when determining payment for future public holidays on termination of an employee.

1. Checks whether or not the employee has "outstanding" Annual Leave entitlement.
   • If No, the employee does not receive payment for any future Public Holiday.
   • If Yes, PayGlobal checks the employee's annual leave table settings.
2. Checks the value of the Annual Leave | NZ Holidays Act 2003 | Public Holiday on termination field.
   • If 'Warn only' PayGlobal displays a warning message in the processing and pay close audit logs only.
   • If 'Pay public holiday', PayGlobal calculates the employee's outstanding annual leave units into days and adds that number of days to the employee's termination date (this is a virtual calculation only).
   • If a statutory Public Holiday (a Public Holiday with the Statutory flag set to Yes) occurs within this date range and the employee is profiled to work on the day on which the Public Holiday falls.
3. PayGlobal then creates a transaction where the quantity equals the number of statutory Public Holidays to be paid. This transaction will be taxed as Extra Pay.

Recommended use

It is recommended that the rate for the allowance be a 'daily' rate (i.e. should not be less than the employee's "Relevant Daily Pay".)

See also

New Zealand Holidays Act

Holidays