[EMPLOYMENTNZ] PAY-AS-YOU-GO FOR FIXED-TERM OR CHANGING WORK PATTERNS – PART 2
Irregular or changing work patterns
Don’t assume that just because an employee is employed on a ‘casual’ employment agreement they will automatically qualify for annual holiday pay on a pay-as-you-go basis.
It is the employee’s work pattern that qualifies them for pay-as-you-go annual holiday pay, rather than their employment agreement type (apart from fixed-term agreements of less than 12 months). To be paid holiday pay on a pay-as-you-go basis, the employee’s work pattern must be so intermittent or irregular that it isn’t possible or practicable to provide 4 weeks’ paid annual holiday.
In addition this can only be done if:
- the employee agrees to it in their employment agreement, and
- the annual holiday pay is shown as an identifiable part of the employee’s pay, (e.g. in holiday and leave records. It is considered best practice to show this on the employee’s payslip).
In this situation the employer should regularly review the employee’s work pattern to see if a regular pattern of work has developed.
If it has, the employer and employee should enter into a new employment agreement that provides for four weeks’ annual holidays to be provided after 12 months further employment, and that removes the 8% payment.
If a regular pattern of work has developed but the employer continues to pay the 8% annual holiday pay for 12 months or more, then the employee will become entitled to paid annual holidays, and any amount already paid on a pay-as-you-go basis can’t be deducted.
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Penny Varley
Payroll Administrator