In addition to the processes laid out by our How Annual Leave & Holiday Pay Work article, there are a few additional aspects to note around Annual Leave in PayHero.
In PayHero each employee has a since date under the Holiday Pay header of their Leave Tab. This date will be either their employment start date (if they’ve been employed less than 12 months) or their prior employment anniversary date. This is the date from which their Holiday Earnings and Holiday Pay Due balances started accumulating.
Upon crossing an employment anniversary, the since date will move to the end of the pay period in which the anniversary fell. For example, take an employee whose Employment Anniversary is the 10th of January and falls in a pay cycle ending on the 14th of January. The new Since Date on this employee’s leave tab will now be the 14th of January.
This is because their Annual Leave becomes due right up to the end of the pay cycle, so the Holiday Pay needs to start accruing from the start of the next pay.
Work Pattern Review Period
For employees with no set work pattern, PayHero will use a review period to determine:
- What 'a week' of leave looks like - this will be calculated by averaging the employee's days per week for the Review Period.
- Whether a day of leave is an Otherwise Working Day.
You can adjust this review period as required and to learn more see our Payroll Settings support article.
Since this review period may be used in determining Annual Leave payments, it’s vital both the employer and the employee are in agreement around entitlements.
Under s21 of the Holidays Act 2003, to determine payment for annual holidays, the portion of the annual holiday entitlement taken must be agreed. This must be determined in relation to the employee’s work pattern at the time the holiday is taken. Employers and employees are strongly advised to discuss the issue of how the entitlement is to be provided in good faith at the start of employment (or when work patterns change) and agree up front as much detail as possible.
Ideally, this should be recorded in the employment agreement. For employees whose work pattern is not predictable upfront, what genuinely constitutes a working week at the time annual holidays are taken will need to be determined by agreement with reference to the employee’s recent work pattern.
Review Period - Employment Agreement Clause
We suggest that a clause is included in the employment agreement describing how the portion of entitlement taken will be determined. In this example we use a Work Pattern Review Period of 8 weeks e.g.
1.1 Determining portion of entitlement taken
The employee and employer agree that the employee’s leave entitlement is apportioned in weeks, and the portion of leave taken will be paid and determined in accordance with the employee’s recent work pattern over the past 8 weeks.
For the purpose of determining the portion of the employee’s entitlement to annual leave that has been taken it is agreed that the following calculation will be used:
Number of days taken as annual leave
Average days per week from recent work pattern over past 8 weeks