Holiday Act changes 1 April 2011

ANSWER ID:33158

The current release of MYOB Payroll includes changes to the Holidays Act. This included the option of cashing in annual leave (our related support note Cashing in annual leave may also help) and changes to the holiday pay calculation. These changes applied from 1 April, 2011.

The Holidays Act amendments include a new formula that can be applied to the payment of public holidays, alternative holidays, sick leave and bereavement leave. You can find detailed information of this change at the Department of Labour website.

In summary, employee are still entitled to be paid holidays at their Relevant Daily Pay rate (that is, what they would have earned, had they worked that day), but an Average Daily Pay rate has been introduced to help calculate the holiday pay rate where it is not possible or practical to calculate the relevant daily pay or where the employee has highly variable earnings.

The Average Daily Pay is the gross earnings for the last 52 weeks, divided by the number of whole or part days worked to earn those gross earnings. Previously, a 4 week average earnings calculation was used.

To use the Average Daily Pay calculation

Go to the Prepare Pays command centre and click Enter Pays.
Double-click the relevant employee.
Click Leave. The Leave Due window appears.
Click the ellipsis (...) button next to the Alternative Holidays due rate.
Select the option Use Average Daily Pay based on the last 52 weeks Gross Earnings option. (Note that this option only becomes available after 1 April.)

Note the following:

You can review and change the gross earnings used for this calculation in the Relevant Daily Pay window (click the ellipsis (...) button beside the earnings amount).
The gross earnings total is divided by the estimated number of days worked. As the payroll does not store the date of every day worked by default, this estimate is based on the employee's standard days per week. If the employee has worked variable days over the 52 weeks, the days worked value should be overwritten to correct the calculation.
If you want to record the actual days worked for future reporting, use the Timesheets or the Split Pay option to assign pays to specific dates.
For employees paid an hourly rate, the daily rate is divided by the employee s standard hours per day to derive an hourly rate.