How to calculate payment
For public holidays, alternative holidays, sick leave and bereavement leave, an employee is entitled to be paid either their relevant daily pay (RDP) or average daily pay (ADP).
How to calculate relevant daily pay
Relevant daily pay is a term that is used in the law. It is an important concept when it comes to working out how much an employee should get paid when they take a public holiday, an alternative holiday, or sick/bereavement leave.
Relevant daily pay means paying an employee what they would have earned if they were at work on the day. This will also
- include payments such as commission, bonuses if the employee would have received them on the day in question
- overtime, if the employee would have received them on the day in question
- include the cash value of board or lodgings if this has been provided by the employer, but
- exclude any employer contribution payment in to an employee superannuation fund.
For most people, relevant daily pay should be easy to figure out.
An employment agreement may specify a special rate of relevant daily pay for payments on public holidays, sick and bereavement leave or alternative holidays. However, it must be at least the same or more than the relevant daily pay amount the employee otherwise would get.
For some workers it may be hard to work out their relevant daily pay. If it is not possible or not practicable to determine what the employee’s relevant daily pay is, or their daily pay varies within the pay period in question, a calculation called Average Daily Pay may be used instead.
Relevant daily pay or average daily pay?
When calculating payment for a leave entitlement, an employer should attempt to determine an employee’s relevant daily pay in the first instance. If it is not possible or practicable to determine relevant daily pay, or if the employee’s daily pay has varied within the pay period when the holiday or leave falls, an employer may pay his or her average daily pay. Average daily pay must be used if it is not possible to determine relevant daily pay and there is no special rate agreed to in the employment agreement.
Where an employer has the discretion to use either relevant daily pay or average daily pay because their employee’s pay varies within the pay period in question, this discretion may be better exercised if the employer knows the results of both calculations.
To assist with this decision, you can use the pay calculator. It will take about 5 minutes to work through. If average daily pay is appropriate for your situation, you will be prompted to enter pay related figures so that the average daily pay can be calculated.