Managing public holidays - New Zealand

This document describes how public holidays are processed in MYOB Acumatica for New Zealand based employees within the context of the New Zealand Holidays Act 2003.

The Holidays Act 2003 states that employees are entitled to:

receive a paid day off should the public holiday fall on an Ordinary Working Day (OWD) - Section 46;
be paid no less than their Relevant Daily Pay (RDP) rate, and where not determinable their Average Daily Pay (ADP) - Section 49;
be paid at least time and a half for working on a public holiday considered an OWD - Section 50
receive payment for public holidays that fall after their employment ends, should the holiday fall on an OWD within the period of earned annual leave taken immediately after the date on which their employment came to an end - Section 40

See the Holidays Act 2003 on the New Zealand Legislation website for the full text of the Act.

Setting up public holidays

In support of the above legislative requirements, MYOB Acumatica — Payrollprovides the ability to administer public holidays payments in bulk, supporting payments for both days worked and not worked. Public holidays are processed in the context of an employee’s work pattern and paid out using the employee’s RDP or ADP rate.

Public holiday pay items can be configured to include penal rates for days worked and be set to automatically accrue an alternative day off if required. Unused alternative holiday leave balance can be paid out to an employee together with any PH due to the employee because of unused annual leave. The latter is calculated in the context of the notional end date as determined by unused earned annual leave.

This document describes the setup steps required to enable public holiday management in MYOB Acumatica, followed by a detailed overview of the steps taken by a payroll administrator to process public holiday payments.

This document provides guidance on how to manage leave entitlements within our product. We recommend that you read the MBIE document “Holidays Act 2003: Guidance on annual holidays, domestic violence, leave, bereavement leave, alternative holidays, public holidays and sick leave” to understand how to meet your obligations as an employer under the Holidays Act 2003. If you have further questions or are in doubt, it is best to seek legal advice to ensure you are meeting your obligations.

Public holiday entitlements and pay items

MYOB Acumatica includes the following public holiday entitlements and pay items be default, configured to transact the relevant payments and accruals.

These default pay items only serve as templates and are by no means prescribed entitlement configuration. It is the responsibility of each employer to ensure that their entitlement accrual and payment settings suit their employment agreements and are compliant with legislation, seeking advice from eligible parties as required.

Entitlement: PUBHOL – Public Holiday

This is a non-accruing entitlement transacted in the unit of “Days” and valued according to the daily rate applicable to the employee. The exact rate method to use is set on the employee’s pay details (i.e. RDP/ADP).

By default, the entitlement is set to be paid out on termination and associated with a default termination pay item, ensuring that the employee will receive payment for PH falling on an OWD within the period of earned annual leave taken immediately after the date on which their employment came to an end.

Pay item: PHNOTWORK – Public Holiday Not Worked

This pay item is used when paying an employee that is not required to work on a public holiday that would have been an OWD. Employees are not expected/required to enter a leave request for this payment.

The pay item is of type “Entitlement Payment” and associated with the public holiday entitlement above.

Pay item: PHWORKED – Public Holiday Worked

This pay item is used when paying an employee for working on a public holiday, regardless of whether or not it is an OWD.

The pay item is of type “Entitlement Payment” and associated with the public holiday entitlement above.

A multiplier of 1.5 has been applied, to ensure that an employee is paid at least time and a half for working. This multiplier may be increased if necessary.

The item is configured to automatically include an Alternative Holiday Accrual pay item when processed. When doing so, the units transacted for the days worked are applied to the Alternative Holiday accrual. For example, if the employee worked one public holiday within the pay period, then one day of Alternative Holiday is accrued.

Employees contracted to work on public holidays are not entitled to an Alternative Day off when working on a public holiday. This item can be copied, and a separate pay item created for this purpose. The multiplier of 1.5 should be retained, but the automatic inclusion of an Alternative Day off can be disabled on this pay item.

Pay item: PHTERM – Public Holiday Termination

This pay item is used when paying an employee for relevant public holidays as determined by the employee’s notional termination date.

The pay item is of type “Termination – Unused Leave” and associated with the public holiday entitlement above.

Public Holiday payments made in accordance with the employee’s notional termination date are taxed as “Extra Pay” and are not exempt from ACC Earner Levy Payments.

Alternative holiday entitlements and pay items

MYOB Acumatica includes the following alternative holiday entitlements and pay items be default, configured to transact the relevant payments and accruals.

Entitlement: ALTHOL – Alternative Holiday

This is an accruing entitlement transacted in the unit of “Days” and valued according to the daily rate applicable to the employee. The exact rate method to use is set on the employee’s pay details (i.e. RDP/ADP). Entitlement accrual is transacted at runtime when processing payment for a public holiday worked. As such, no explicit accrual rules need be specified for this entitlement.

Alternative Holiday accrual is valued at the employee’s standard rate. Enabling the Auto adjust provisioned entitlement amount option on the Valuation tab of the entitlement will ensure the entitlement liability is adjusted correctly to match payments made at the employee’s FBAPS rate (i.e. RDP/ADP).

Pay item: ALTHOL – Alternative Holiday Accrual

This pay item is used to apply the payment for an employee who is required to work on a public holiday that is an OWD.

It provides the employee with a “credit” for leave to be taken at another date, i.e. it is accruing an alternative holiday for a PH worked.

The pay item is of type “Entitlement Accrual” and associated with the Alternative Holiday entitlement above.

Alternative Holiday liability is not typically tracked. However, if you choose to do so, the Include Accrual in GL option on the Additional Info tab of the Pay Item window (MPPP should be enabled.

Pay item: PHTERM – ALTHOLTAKE – Alternative Leave Taken

Used to apply the payment for an employee that has asked to use some of their accrued Alternative Holiday Days, i.e. tracks what Alternative Leave Days were taken.

The pay item is of type “Entitlement Payment” and associated with the Alternative Holiday entitlement above.

Pay item: PHTERM – ALTHOLTAKE – Alternative Leave Taken

Used when paying an employee for unused Alternative Holiday leave during termination.

The pay item is of type “Termination – Unused Leave” and associated with the Alternative Holiday entitlement above.

Work calendar

MYOB Acumatica includes a default New Zealand calendar on the Work Calendar screen (CS209000), prepopulated to contain statutory holidays but excluding regional holidays. This default calendar can be duplicated and modified to suit the requirements of each region, including adding region-specific public holidays. Different work calendars can also be created for different working patterns. Calendars are associated with employees using the Employee Pay Groups screen (MPPP2250).

A good example of this would be to create a separate working calendar for employees expected to work on public holidays. In such a case, public holidays in the Exception list may be indicated as a “Work Day”. Doing so will ensure that “Public Holiday Worked” pay items are processed when preparing a public holiday payment batch.

Some public holidays which fall on a Saturday or Sunday, are eligible for Mondayisation/Tuesdayisation. In such a case the public holiday, originally falling on, for example, a Saturday is observed on the following Monday (or following Tuesday, should the Monday already be a PH). The application of this rule must be evaluated per employee, considering their working schedule. For example, if an employee was scheduled to work on an original day, the public holiday is not Mondayised for that employee. To reduce the administrative burden of managing such cases, the default calendar exceptions include, where applicable, the original an observed public holiday dates. See the Public Holiday Processing section for more detail on how such cases are processed in practice.

Pay item liabilities

The Pay Item Liabilities screen (MPPP1025) allows payroll administrators to manage, in bulk, the pay items to be considered when valuing holidays and leave payments. Liable pay items are valued based on the employee’s pay and their pay history.

Public Holidays, for instance, must be paid at no less than the employee’s Relevant Daily Pay (RDP), or Average Daily Pay (ADP) rate (only if RDP calculation is not practical). Using the Pay Item Liability screen, the payroll administrator can indicate the pay items to be used when determining these rates. Following an example of how these items are used when calculating Public Holiday payment rates per employee.

Relevant daily pay

The RDP rate is calculated as follows:

Retrieve all Pay items flagged as Liable for RDP
Identify which of the liable items are in the employee’s standard pay for the relevant pay group
Determine the RDP rate as per the RDP definition for each identified standard pay item. (To see the RDP definition for a pay item, click the View Definition link next to the pay item in an employee’s standard pay.)

Average daily pay

The ADP rate is calculated as follows:

Retrieve all pay items flagged as Liable for ADP
Retrieve 52 weeks pay history for the employee
Evaluate the 52 weeks pay history in the context of the liable pay items to determine the gross liable income to be used in the ADP valuation.
Divide by the ADP divisor, which is calculated as follows:
- Retrieve the employee’s work schedule for the past 52 weeks and determine the number of whole or part days worked in this period. Whether the employee has worked on a day is determined by the Working Day flag on the Employee Work Schedule.
- If historic pays have been imported, retrieve the work days for those separately.
- The divisor is the sum of the two.

Items liable for ADP are defined by Section 14 (Gross pay) of the Holidays Act. Section 14 also applies to Annual Leave (aka Holiday Pay). Therefore Pay Items with “Liable for ADP” ticked are also expected have “Liable for Holiday Pay” ticked and vice versa. The only reason to have difference would be where the employer has obtained specific legal advice to do so.

Pay group configuration

Using the Pay Groups screen (MPPP2710), the payroll administrator maintains the groups that employees are paid in, specifying the default pay items to be used when processing Public Holiday worked/not worked payments. Each public holiday batch applies to a single pay group, and therefore all employees who are members of that group. Employees are assigned either of the default pay items according to the working pattern and work calendar configuration.

Employee termination also depends on the default pay items being set. Using the default item the Payroll module derives the underlying entitlement and its associated termination pay item to be used for payments.

The Employee Pay Groups screen (MPPP2250) describes an employee’s membership to one or more pay groups and is used to specify pay rate details. The following are of particular importance to public holiday processing:

Calendar ID: The calendar defaults from the Employee profile when the pay group association is first made and used as a source for public holidays processing. This calendar is also used to pre-fill the employee schedule when a new pay run is opened and the employee Work Pattern Source is set to Work Calendar. This entry can be changed as required.
Standard Rate: The rate used for leave valuation if the FBAPS Rate on the employee profile is set to RDP - Standard Rate.

Employee pay detail configuration

Settings that determine employees’ working arrangements are available on the Pay Details screen (MPPP2310).

Employment agreement

Public Holiday payments are particular to an employee’s employment agreement. The following guidelines provide an overview of how the settings on the Employment tab of the Pat Details screen can be applied to different working arrangements:

Work Pattern Source

This setting is used when evaluating whether a public holiday falls on an OWD for an employee, and when deriving the scheduled work hours to calculate the leave payment rate, if the employee’s FBAPS Rate is set to “RDP - Standard Rate”. The setting has the following options:

Work Calendar: Suitable for use for any employee, working a predictable, static work pattern that fits a seven day work week. The actual work calendar applied to calculations is that which is set on the Employee’s Default Pay group.
Employee Schedule: Appropriate for employees working variable hours, such as those that are rostered or working shifts.

FBAPS Rate

This setting is used when calculating leave payments to an employee for a Public Holiday worked/not worked.

It is important to note that this rate only serves as the employee’s default rate. When processing leave payment in a pay run, all three rates are calculated and provided for comparison and review in the leave summary report. The rate as specified in the employee pay details is applied by default, but can be changed by the payroll admin should a higher rate apply.

The setting has the following options:

Relevant Daily Pay: The Relevant Daily Pay (RDP) option can be based on either of the following:
- Standard Rate: The employee standard hourly rate, as specified on their default pay group. Use this setting if a daily rate can consistently be determined from the employee’s hourly rate, not having to consider any additional income such as particular daily allowances, or overtime.
- Standard Pay: The employee's standard pay definition, containing a granular specification of pay items due to the employee according to a defined pattern. Use this setting if the employee regularly receives income such as allowances, or overtime on particular days.
Average Daily Pay: The Average Daily Pay (ADP) is suitable only if it is not possible or practical to work out the relevant daily pay or an employee’s daily pay varies in the pay period in question.
Agreed Rate: The Agreed Rate may be used when an employee’s agreement specifies a rate higher than either ADP/RDP. If selected, the user is prompted to enter the applicable rate.

Standard pay

As mentioned above, the payroll administrator might choose to value an employee’s leave payments according to a granular RDP definition, specified for relevant standard pay items marked as liable for RDP (see “Pay Item Liabilities” on page 7). The RDP definition attached to a standard pay item acts as a template and evaluated in the context of a particular pay period to determine the payments due to an employee when, for instance, taking a day off on a Public Holiday.

For example, an employee receiving a regular higher duty allowance on Fridays should still receive this allowance when observing a Public Holiday. Using the RDP definition, the Payroll Administrator can configure the pattern according to which the allowance is typically paid - in this case, every Friday. A pattern frequency of one week is selected, and the allowance amount captured against the relevant day. Should a public holiday fall on a Friday, this allowance amount would be incorporated into the employee’s RDP rate.

It is important to note that if this RDP rate calculation method is selected, all relevant pay items (e.g. Wages, Allowances, Overtime, etc.) require an RDP Definition.

Enduring allowances also require careful consideration. Capturing an RDP definition for such items may lead to double-dipping. In such a case, the Payroll Administrator might choose one of two paths:

Decide not to capture an RDP definition, in which case the RDP rate applied to leave may not be a true reflection of the employee’s daily earnings, even though the employee’s final pay will include all allowances due.
Decide to capture an RDP definition, in which the administrator will have to manually adjust the remaining allowance amount payable for the period.

Employee work schedule

The Employee Work Schedule screen (MPPP2260) provides a single point of reference against which to review an employee’s historic work pattern, overlaying the employee's scheduled and timesheet leaves hours, and indicating whether leave was taken on a particular day.

The Work Pattern Source specified on the Pay Details screen (MPPP2310) affects how entries are maintained within the employee schedule in the following ways:

Working Calendar: In this case, entries are automatically generated in the employee schedule when creating a new pay run.
Employee Schedule: In this case, entries are manually uploaded for each employee by the payroll administrator.

In either case, the payroll administrator has the option to make manual changes and adjustments to an employee’s schedule as required.

The employee schedule also plays an important role in calculating and processing leave taken. Schedule entries are either sourced from the work calendar or rostering system (whichever suits the employee pattern), providing a single consistent mechanism against which to perform the following:

ADP calculations use the employee schedule to determine the days worked over the past 52 weeks.
RDP Standard rate calculations use the employee schedule to determine the hours worked on a particular day when basing the RDP rate of an employee’s standard hourly wage.
Validate whether or not a public holiday falls on an OWD.

Processing public holidays

Once the required configuration steps have been completed, public holiday pay items can be processed in pay runs. The first step to doing so is to create a Public Holiday Processing batch containing the pay items relevant to each of the employees in a particular pay group.

Preparing public holiday batches

The Public Holiday Processing screen (MPPP3110) allows a user to create a batch of public holiday transactions that can be added to employees’ pays. Public holidays are taken from the selected Work Calendar and an entry is created for each employee in the specified Pay Group. The public holiday pay item associated with each entry depends on how the relevant Work Calendar has been configured. If the public holiday has been marked as a “work day” then the employee is awarded the default “Public Holiday Worked” pay item as specified on the pay group. If not, the employee is awarded the default “Public Holiday Not Worked” pay item.

The selected Work Calendar should match the calendar specified on the employee’s default pay group.

Once imported, entries are validated in the context of the employee’s work pattern (as specified in the employee pay details). Should the day not fall on an employee’s OWD, a warning is raised promoting the user to remove the entry prior to taking it off “Hold”. The user can filter the record set by using standard grid filters to identify and address all records with warnings.

Once a public holiday processing batch has been imported, in part or whole, into a pay, the entire batch is locked down. As such no more changes or corrections can be made to the batch. Only once the public holiday import has been undone (only possible on Open pays), can the batch be moved to “Hold” and can corrections be made. As such we recommend preparing smaller batches, aligning with the requirements of the next scheduled pay of the particular pay group.

Paying public holidays

Relevant public holiday transactions created using the Public Holiday Processing screen can be imported by selecting Import Public Holidays from the Actions menu on the Pay Run Details screen (MPPP3120). The import process scans all public holiday transaction batches for transactions that fall within the pay period of this pay run. Importing public holidays adds pay items to the pays of all affected employees, rate the pay item using the employee’s chosen FBAPS rate and populate the Days Taken window with details of the Public Holiday(s).

If a “Public Holiday Worked” pay item is imported, and the pay item is configured to automatically accrue an “Alternative Holiday”, then an accrual pay item will automatically be added and the quantity set to the number of public holidays worked within the period.

Reviewing public holidays payments

The Employee Leave Summary screen (MPPP4045) allows payroll administrators to review all Annual and FBAPS leave captured in a pay run, prior to completing the pay run. Each line item describes the leave period and relevant valuation rate applied. To compare rates, the user is also provided with other possible rates that might apply. The user can choose to override the applied rate method, or to even override the Payment Amount itself. Doing so will re-evaluate the calculated amount in the pay run. If the user has not applied the highest possible rate to the pay item a warning is shown in the Status column. The user may choose to ignore the warning message if required.

Paying public holidays on termination

Employees are entitled to receive payment for public holidays that fall after their employment ends, if the holiday falls on an OWD and the employee has some remaining earned annual leave balance.

For example, an employee who works Monday – Friday resigns and their last day of employment was Friday 20th Dec 2019. As at that date they have two weeks AL “earned” to be paid out. Had the employee not resigned, and instead taken the two weeks as AL, then this period would have covered Xmas Day, Boxing Day, New Year’s and Day after New Year’s. This would make the employee’s notional termination date the Thu 9 Jan 2020. The employee is therefore required to be paid for those four public holidays as part of their final (aka termination) pay, in accordance with Section 40 of the Holidays Act 2003.

The termination wizard, launched by clicking the Termination button on the Employee’s Current Pay screen (MPPP31010), automatically calculates the notional end date according to the employee’s last day of work, their unused earned Annual Leave balance, and any eligible public holidays falling within this period. Public Holidays payable are listed on the Public Holidays tab of the termination wizard, rated according to the RPD/ADP rate applicable to the particular day on which the public holiday falls.

Before starting the termination wizard, the payroll administrator must ensure that:

All annual leave taken prior to the employee’s last day of work is captured. This will ensure that the latest earned balances are used when calculating the employee’s notional end date.
The employee schedule contains the required future date entries, allowing the solution to determine if a PH falls on a OWD for an employee, and to derive the schedule hours for RDP calculation, if based on the employee’s standard hourly rate.

Upon saving and closing the termination wizard the relevant Public Holiday current pay entries are added to the employee for payment.