Public holiday pay in New Zealand is governed by the Holidays Act 2003, which sets out two methods for calculating an employee’s pay on a public holiday: relevant daily pay and average daily pay. Getting these calculations wrong is one of the most common payroll errors in New Zealand.
This guide explains both calculation methods, covers the rules for different employment situations, and helps you pay your employees correctly on public holidays.
This article is general information, not legal advice.
Key Takeaways
- Employees are entitled to relevant daily pay for unworked public holidays
- Employees who work on public holidays receive time-and-a-half plus an alternative holiday
- Average daily pay can substitute when relevant daily pay cannot be determined
- The Holidays Act 2003 sets the framework; your employment agreement cannot provide less
- Incorrect public holiday pay is a common source of Employment Relations Authority claims
Public Holiday Pay Entitlements
Employee Does Not Work
When a public holiday falls on an employee’s otherwise working day and they do not work, they receive their relevant daily pay — their full pay for that day.
Employee Works
When an employee works on a public holiday, they receive:
- Time-and-a-half (1.5× their relevant daily pay) for the hours worked
- An alternative holiday (day in lieu) if the day would otherwise be a working day
Example
Employee: Works 8 hours on ANZAC Day Daily pay: $300 Pay for the day: $300 × 1.5 = $450 Plus: One alternative holiday (paid day off at a later date)
Calculation Method 1: Relevant Daily Pay
Relevant daily pay is the amount the employee would have earned on the day of the public holiday if it had been a normal working day.
What’s Included
- Base salary or wages
- Regular allowances
- Commissions (if regularly earned)
- Piece rates (if applicable)
- Regular bonuses (if tied to the day)
What’s Excluded
- Overtime (unless it would have been worked on that day)
- One-off payments
- Reimbursements
Variable Hours Employees
For employees with variable hours, relevant daily pay is what they would have earned based on their pattern of work.
Example: Employee works different hours each day. On the public holiday (Tuesday), they would have worked 6 hours at $30/hour.
- Relevant daily pay: 6 × $30 = $180
Calculation Method 2: Average Daily Pay
When relevant daily pay cannot be determined (e.g., the employee has no set pattern, or their pay varies significantly), the employer can use average daily pay.
Formula
Average daily pay = Total gross earnings (last 52 weeks) ÷ Number of whole or part days worked in that period
When to Use
- Employee has highly variable hours
- Employee is on commission with no guaranteed base
- Employee has been employed for less than a full year (use the period of employment)
Example
Employee total earnings: $60,000 over 52 weeks Days worked: 250 Average daily pay: $60,000 ÷ 250 = $240
Alternative Holidays (Days in Lieu)
What Is an Alternative Holiday?
An alternative holiday is a paid day off that an employee earns when they work on a public holiday that would otherwise be a working day.
Rules
- The employee chooses when to take the alternative holiday
- The employer can request a date but cannot unilaterally assign one
- The alternative holiday must be taken within 12 months (in practice)
- If employment ends, unused alternative holidays are paid out
Payment for Alternative Holidays
An alternative holiday is paid at the employee’s relevant daily pay for the day they take it.
Common Scenarios
Public Holiday Falls on a Rest Day
If a public holiday falls on the employee’s rest day (e.g., a Sunday for a Monday-Friday worker):
- The employee is not entitled to relevant daily pay
- The public holiday does not create an entitlement
- Unless Mondayisation applies (moving the holiday to Monday)
Public Holiday During Annual Leave
If a public holiday falls during an employee’s annual leave:
- The public holiday does not count as annual leave
- The employee receives relevant daily pay for the public holiday
- Their annual leave balance is reduced by one day (not two)
Employee on Sick Leave
If an employee is on sick leave when a public holiday falls:
- They receive relevant daily pay for the public holiday
- The sick leave day is not deducted
- The public holiday is treated separately from sick leave
Common Mistakes
Using Average Daily Pay When Relevant Daily Pay Is Determinable
Relevant daily pay is the default. Average daily pay should only be used when relevant daily pay cannot be determined. Using the lower average to save money is a breach.
Not Paying for Alternative Holidays
When an employee works on a public holiday, they earn an alternative holiday. Forgetting to track or pay for these creates liability.
Deducting Annual Leave for Public Holidays
A public holiday during annual leave is not annual leave. Do not deduct it from the employee’s leave balance.
Not Including Regular Allowances
Relevant daily pay must include regular allowances that the employee would have received on the day. Excluding them underpays the employee.
Frequently Asked Questions
How is public holiday pay calculated in New Zealand?
For unworked holidays, employees receive their relevant daily pay. For worked holidays, they receive time-and-a-half plus an alternative holiday. Relevant daily pay is what they would have earned on a normal working day.
Can I use average daily pay for all employees?
No. Average daily pay is only used when relevant daily pay cannot be determined. If an employee has a regular pay pattern, you must use relevant daily pay.
Do part-time employees get public holiday pay?
Yes. Part-time employees are entitled to relevant daily pay for public holidays that fall on their otherwise working days. If they work on the holiday, they receive time-and-a-half plus an alternative holiday.
What happens to unused alternative holidays?
If employment ends, unused alternative holidays must be paid out at the employee’s relevant daily pay rate.
Is there a maximum for relevant daily pay?
No. Relevant daily pay reflects what the employee would have earned. For high earners, this could be a significant amount.