How do you work out annual holiday payments?
Payment for annual holidays is at the greater of either the ordinary weekly pay at the time the holiday is taken, or the employee’s average weekly earnings over the 12-month period before the annual holiday is taken. Employees are entitled to receive their pay for annual holidays before the holiday commences, unless the employer and employee agree that the normal pay cycle will continue undisturbed by the time off work.
“Ordinary weekly pay” represents everything an employee is normally paid weekly, including:
- regular allowanaces, such as a shift allowance
- regular productivity or incentive-based payments (inlcuding commission or piece rates)
- the cash value of board or lodgings
- regular overtime
For many people, ordinary weekly pay is quite clear because they are paid the same amount each week. Where ordinary pay is unclear for any reason, it can be established by:
- going to the end of the last pay period
- from that date, going back
- four week, or
- if the pay period is longer than four weeks, the length of the payperiod
- taking the gross earnings for that period
- deducting from the gross earnings any payments that are irregular or that the employer is not bound to pay
- dividing the answer by four
Sometimes an employment agreement will include a specified ordinary weekly pay. This figure can be used if it is greater than the actual ordinary weekly pay.
“Average weekly earnings” are determined by calculating gross earnings over the 12 months prior to the end of the last payroll period before the annual holiday is taken, and dividing that figure by 52. Certain payments make up gross earnings and should be included in the calculation.
The Act also describes how to calculate annual holiday payments in a variety of circumstances, including:
Date Modified: Wednesday, 9 November 2011
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