Holiday pay and entitlements: How to calculate

The holiday season is a chance to relax with family and friends. Take the time to calculate and pay your staff what they’re entitled to, and everyone will have a merry Christmas.

Public holidays, annual closedowns, different pay rates – there are many considerations in the run-up to Christmas apart from buying presents.

Employees are entitled to a paid day off on a public holiday if it would otherwise be a working day.
Many businesses have an annual closedown over the Christmas period, when staff have to take time off, even if they don’t have any annual leave.

If public holidays fall inside your annual closedown period, you must pay employees for them if they're on days they’d usually work.

This Christmas season two public holidays – Boxing Day and January 2 – fall on a Saturday, so this has implications for employees.

For staff who don’t work weekends, the first workday after these dates will be treated as their public holidays – so they won’t have to work on Monday 28 December 2015 and Monday 4 January 2016.
If your employees usually work weekends, then there are two options:
  • They can get the Saturdays as paid days off.
  • If they work on those Saturdays, you must pay them time and a half and allow them to take a paid day off later. Read about days in lieu in’s Holidays and leave section.

Less than a year employed?

If you have an employee who has been in the job for less than 12 months, they still have to take time off during an annual shutdown.

Here’s what you should do for these new employees:
  • Step 1. Pay them 8% of their gross salary earned up to the shutdown start date, less any annual leave already taken.
  • Step 2. Change the date they become entitled to annual leave to one year on from the start of the shutdown.
  • Step 3. Let them take paid annual leave in advance (you both have to agree to this).
  • Step 4. Don’t forget to allow for paid public holidays if these fall on a day they usually work.
You must give employees 14 days’ notice of the closedown.


With the right systems in place, you shouldn’t have too much trouble working out what to pay your employees when they take leave. It’s important to:
  • Keep all time and wage records up to date and accurate.
  • Understand what your employees are entitled to – especially those who work irregular or part-time hours.
Get your calculations right by using the holiday pay tool on the Ministry of Business, Innovation and Employment’s website.

Public holidays over Christmas 2015/New Year 2016

  • Friday 25 December – Christmas Day
  • Saturday 26 December or Monday 28 December – Boxing Day
  • Friday 1 January – New Year's Day
  • Saturday 2 January or Monday 4 January – Day after New Year's Day
There’s more information on leave during an annual closedown on, and also information on public holidays, including transferring days.

Article first appeared on the website.

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