Annual Leave: Common mistakes for public holiday payroll

Leave entitlements are complicated enough on their own, but what happens when you throw public holidays into the mix? It is not uncommon for employers to get penalised or caught in legal problems due to oversight in employees’ rights.
We have come up with a list of common mistakes when it comes to handling payrolls during public holidays.
But first, it is important to be aware of when the public holidays are in your respective state or territory.
Photo by Adolfo Félix on Unsplash
1. Making employees work on a public holiday
As a business owner, productivity means everything, even on public holidays. Your instinct may be to get your employees to work on public holidays because that means more work gets done.
However, under the National Employment Standards (NES), employees have the right to refuse to work on public holidays if they have reasonable grounds.
While employers can request employees to work on a public holiday, it is best to check the employment contract and put the request in writing, indicating the working hours and the pay rate on the day.
2. Assuming employees who don’t work on public holidays don’t need to be paid 
If a public holiday coincides with a full-time or part-time employee’s usual workday, employees are entitled to take the day off while employers are still required to pay their minimum pay rate for their usual hours.
Casual employees will not need to be paid on public holidays unless they actually work on the day itself. Employers cannot change an employee’s roster just to avoid the payment.
3. Taking time off in lieu
To avoid public holiday penalty rates, employers sometimes negotiate with their employees to take time off in lieu or swap working days. This may be a wiser choice for small business owners on a tight budget.
However, you must double check the employee’s employment contract and award to ensure that you are not in breach of the Fair Work Act. You are also still not allowed to force your employee to take time off in lieu.
4. Deducting public holidays from annual leave balance
Employees frequently take leave on public holidays to spend time with family and friends. Any paid leave taken on public holidays is separate from an employee’s annual leave.
This means that the time taken off on a public holiday cannot be deducted from an employee’s annual leave balance.
5. Taking JobKeeper into account
Some leave entitlements also change when JobKeeper is taken into consideration.
Employers and employees can still come to an agreement on whether or not to take paid leave on a public holiday. If an employee is on paid leave, they must be paid the greater amount between:
  • their JobKeeper payment; and
  • their usual pay during paid leave.
Note that employers should include public holiday pay into the employee’s usual pay.
We’re here to help
If you have any doubts about your public holiday payroll, do not hesitate to contact us for advice! Our consultants will be happy to assist you with your payroll. Simply drop us a message on our website.