1. Remediation for Part Time and Variable hourly paid employees
A Case Study
Remediation for Part Time and Variable hourly paid employees

2. Remediation calculations for part time and variable hourly paid employees
- Its what the ‘Holidays Act 2003’ (ACT) was never really designed to manage.
- well at least not easily
So, what was the ACT designed for:
Full time or part time employees that worked
5 day a week employee’s
On the same hours each day

3. Working profiles are very diverse and create issues when calculating leave liabilities for:
Split shifts Bus drivers, hotel workers
Cycle shifts longer Industry specific
in duration than the
pay period
Variable shifts - Petrol stations, fast food operators,
bars, restaurants and care workers
Seasonal work - differential between summer
and winter and/or with closedowns

4. The example today is from an Industry where their employees have the following employment conditions:
Employed on IEC and/or Collective with the same terms and conditions (800 employees)
Were originally employed for a set-number hours per week employment agreement hours) that varied, usually upwards depending on the additional hours they took on.
In most cases the additional hours were not made permanent even though in many cases they should have as it varied consistently from their original contracted hours.
All staff were given an entitlement of annual leave based on 4/52ths of all hours worked in their anniversary year, which as we know is incorrect.

5. First Steps in the project:
Establish what the working week for an employee is
This required calculating the following:
Hours of work in the week before leave was taken
Average hours over the last 4 weeks
Contract hours are also a consideration
If the employer had not being paying the employee their contracted hours, at a minimum then there would be an issue (not with this employer though)
All employees worked each week apart when they went on holiday or took BAPS leave.

6. Calculated as follows:
Working week hours
 Calculated as follows:
Week hours
Week hours
Week hours
Week hours
Average hours per week 30 hours
Last weeks hours 28 hours
Under our methodology the working week is 30 hours
However if OWE is based on the last 4 weeks then you should use this average for the working week.

7. How to calculate what part of week the employee has taken in annual leave.
Once the working week is established the following calculation is completed:
Establish the hours of leave being taken i.e hours
Divide that into the working week hours i.e hours
Answer: employee has taken 20% of weeks leave
Following this holiday, the employees balance of leave would be as follows:
Annual leave entitlement weeks
Less weeks
Balance weeks

8. Annual leave entitlement 3.80 weeks
How to calculate what part of week the employee has taken after working week hours change
Establish the hours of leave being taken i.e hours
Divide that into the working week hours i.e hours
Answer: employee has taken 25% of weeks leave
Following this holiday, the employees balance of leave would be as follows:
Annual leave entitlement weeks
Less weeks
Balance weeks
Same hours taken however different % of a week

9. Leave liability $ Payment for annual leave (1st instance)
20% of the greater of:
OWP or
AWE
Payment for annual leave (2nd instance)
25% of the greater of
OWP or
Each piece of leave is part of a week that builds to 4 weeks eventually unless termination comes first.
Its based on having correct OWP and AWE figures at the time leave was taken or use an adjustment page.

10. Terminations In the event of a termination an employee would be paid:
Payment for annual leave (1st instance)
380% of the greater of:
OWP or
AWE
Plus 8% of gross taxable earnings following anniversary
Payment for annual leave (2nd instance)
355% of the greater of
OWP

11. Remediation calculations
Holiday pay shortfalls must add into the period that they were supposed to be made.
i.e. Employee underpaid $ in a week leave was taken.
This gross amount must be added into
OWP for last week (or the last 4 weeks if appropriate)
AWE for the next 12 months
When completing a remediation, employers cannot simply work out the shortfall and add 8% to the total value at the end of the calculation period.
Any underpayment has to be included in subsequent calculations from date of shortfall (unless its a backpay .. refer David’s last newsletter)

12. Complex situations
Where an employee works 32 hours for the first 6 months and then drops down to 16 hours for the second months (permanent change)
They are entitled to 4 weeks at 16 hours as this is their working week.
However, the AWE rate is elevated
I believe that the ACT should ensure that an employee gets at least 8% of earnings from the use of their entitlement.
The employee takes several weeks of LWOP (as defined section 16 ACT)
Once an employee takes more than 1 weeks leave without pay their anniversary date can be moved
Once 52 working weeks that includes the 1 week above the employee can receive their entitlement
It may take an employee 1 year and say 1 month to receive their entitlement

13. Examples of a spreadsheet developed to manage this remediation

15. Bad habits
Many employers have the following bad habits when an employee leaves or skips out without notice:
Does not calculate a final pay, just leaves this in the system. Does not pay the hours from the last week.
and does not have a clause in their contract that says they can deduct a week or two in lieu of notice.
Takes the holiday pay as ‘in lieu of notice’
Leaves the employee on the books in case they come back (creates issues for them if not terminated with IRD.
Employers are obligated to try and find employees to pay their holiday pay.
Remember that unclaimed holiday pay goes to unclaimed monies (usually over $ pp per year – opinion)