Public holiday entitlements under the Employment Leave Bill

This describes the new Employment Leave Bill, not the rules that apply today. This comes into force on 6th August 2028. Until it comes into force, the current Holidays Act 2003 still governs all leave (see our current leave articles).

Public holiday entitlements will still hinge on whether the day is an Otherwise Working Day (OWD), but the Bill will add a clear test for when that is not obvious. Payment for working a public holiday will change slightly, and alternative holidays will accrue in hours rather than as whole days.

Whether an employee is entitled to a paid day off, or to alternative leave, will continue to depend on whether the public holiday falls on an OWD for them.

A day will be an OWD for an employee (including those who work only casual hours) if they would have worked on it according to the days of work, or a pattern of days of work, specified in their employment agreement.

If the agreement does not specify days of work, or a pattern of days, a new test will apply. It will apply both to employees with standard hours but no set days, and to employees with only casual hours. If the agreement specifies some days of work, the test will not apply to any additional days the employee works.

The test will be satisfied if the employee has worked (or been on paid or unpaid leave) on 50% or more of the day of the week that corresponds to the public holiday, measured over:

A day will not be an OWD if it is reasonable to expect the employee would not have worked on it because they are on parental leave, volunteers leave, accident compensation, or unpaid leave. The exception is unpaid leave taken because of an annual closedown or agreed closure, in which case the day must still be treated as an OWD. This aligns with and clarifies the current position.

The Bill will carry over the current rule that, if a public holiday falls during a period of annual leave (including annual leave taken during a closedown or agreed closure) and the day is an OWD, it must be treated as a public holiday and not as annual leave.

If a day is an OWD and the employee was required or agreed to work, but does not work (or works only part of the day) due to sickness, bereavement or family violence, public holiday entitlements will still apply, and the hours not worked must not be treated as sick, bereavement or family violence leave.

If the employee does not work at all, the full day will be treated as a non-worked public holiday: they will be paid a leave payment and will not be entitled to any alternative leave. If they work part of the day, worked public holiday entitlements (public holiday pay and alternative leave accrual) will apply to the hours worked, and they will also receive a leave payment for the hours not worked, up to the hours they would have been paid if they had not worked at all.

The employee will be paid a leave payment, calculated the same way as any other leave, for the hours they would otherwise have worked on the day.

The number of hours will be what their employment agreement specifies, or, if the agreement does not specify it, an average of their daily hours. The Bill will provide a formula for the average: the total hours worked (or on paid or unpaid leave) in the reference period, divided by the number of days worked (or on paid or unpaid leave) in that period. (The reference period will be the 93-day period covered in the leave payments article.)

For each hour an employee works on a public holiday (whether or not it is an OWD), the employer must pay:

An identifiable amount will be any additional amount payable for working on a particular day of the week (for example, a Saturday or Sunday rate) or on a public holiday.

The ordinary hourly rate here will be defined the same way as for the LCP: the lowest wage rate in the agreement for an hour of work (or salary attributable to one standard hour), plus an hourly average of piecework wages for piece rate workers, and not including commission, fixed or variable allowances, or penal rates. For commission or piece rate workers whose ordinary hourly wage is lower, the 50% must be calculated on no less than the minimum wage.

The effect is that the employee will keep all contractual rates payable for working the public holiday, but the extra 50% will not be assessed on top of those rates. It will apply only to the employee's lowest rate of pay, and where the employee already receives a higher contractual rate for the public holiday or that day of the week, they will get the greater of that contractual rate and 50% of their ordinary hourly rate, not both.

Worked examples:

Example 1. An employee earns $30 per hour, has a contractual overtime rate of $45 per hour (for work over 8 hours a day), and a Saturday rate of $65 per hour.

Example 2. An employee earns $30 per hour and a Saturday rate of $40 per hour. Working an ordinary hour on a public holiday that falls on a Saturday: the required payment is $30, plus the greater of 50% of $30 ($15) or the identifiable amount ($40 - $30 = $10). The greater is $15, so the employee will earn $30 + $15 = $45.

Example 3. An employee earns $25 per hour, has a contractual overtime rate of $37.50 per hour (for work over 8 hours a day), a Saturday rate of $50 per hour, and earns piece rates with an average hourly piecework wage of $10. Working an overtime hour on a public holiday that falls on a Saturday: the required payment is the $37.50 overtime rate (the Saturday premium is the identifiable amount and is excluded here) plus all piece rates actually earned, plus the greater of 50% of the ordinary hourly rate (($25 + $10) x 50% = $17.50) or the identifiable amount ($50 - $25 = $25). The greater is $25, so the employee will earn $37.50 + $25 = $62.50, plus the piece rates actually earned during the day.

If the employment agreement specifies the number of hours the employee would have worked on the public holiday, and they work some but not all of them, they will receive public holiday pay and accrue alternative leave for the hours worked, and the leave hourly rate for the unworked hours (with no alternative leave accrued on the unworked hours).

This will only apply where the number of hours the employee works on that day of the week is specified in their employment agreement.

Under the current system, an employee gets a whole alternative holiday when they work a public holiday that is an OWD, regardless of how much of the day they work.

Under the new system, for every hour an employee works on a public holiday that is an OWD for them, they will accrue one hour of alternative leave, and for each part hour worked, that part of an hour.

If an employee is on call on a public holiday that is an OWD for them, and their agreement provides that the employer may require them to work:

Alternative leave will be able to be taken on any day (or part day) the employee could have worked under their agreement, and the standard hours they may be required to work will be reduced by the hours taken.

It will be able to be cashed up by agreement at any time, removing the current 12 month wait. The framework for cashing up will align with annual leave.

The minimum rate for each hour cashed up will be the lowest wage rate payable under the employee's agreement as at the date the cash up request is made (or, for a salaried employee, the salary attributable to one standard hour as at that date). It will not be day specific, since it is not tied to a particular day.

Piece rate workers will also get an hourly average of piece rates (using the 93 days before the relevant pay period), and piece rate or commission workers will be paid no less than the minimum wage per hour. Fixed allowances will not be added to a cash up payment.

Under the current Act, an employer and employee can agree in writing to transfer a whole public holiday to another day that is an OWD, so the employee takes a paid day off on the other day and works and is paid as normal on the public holiday (with no time-and-a-half or alternative holiday). This is meant to let employees move a public holiday for reasons of personal or cultural significance.

The Bill will clarify that an agreement to transfer a whole public holiday can only be made at the employee's request. An employer will still be able to ask, or (if the agreement provides for it) require, an employee to work a public holiday, but in that case they must pay the employee for working a public holiday and provide alternative leave for each hour worked. This will not apply to transferring part of a public holiday by agreement (where an employee starts work on one day and finishes on another, and one or both are public holidays), which an employer will still be able to initiate so a full shift, rather than two part shifts, can be treated as a public holiday.