Our newsletter of 4 November 2004 included an explanation and examples of the entitlement of employees to payment for their holidays over the Christmas and New Year periods, depending on whether or not they normally work on the Saturday and/or the Sunday. The Department of Labour has now provided practical guidance on the calculations that are necessary to ensure that at least the statutory rates are paid for public holidays.

Where the employee does not work on the public holiday
If an employee does not work on a public holiday, or on a substitute day, but is entitled to be paid for it, the amount of the payment must be the employee's "relevant daily pay". This is the amount that the employee would have been paid for the day had the employee worked on that day. This must include any productivity and incentive payments, overtime payments, "penal rates", and the cash value of board and lodgings.

The term "penal rates" refers to additional amounts in an employment agreement to compensate an employee for working on a particular day of the week, commonly Saturday or Sunday, or on a public holiday. For example, time and a half, double time, or a lump sum.

Where the employee works on the public holiday
If an employee does work on a public holiday, or on a substitute day, the amount of the payment must be at least time and a half for the hours worked. In addition, if the day was a normal working day for the employee, the employee must be given another paid day off at a later date.

The precise amount of the payment for working on a public holiday is the higher of

• the statutory calculation, i.e. the employee's relevant daily pay, but excluding any penal rate, plus half of the resulting amount, and
  
  
• the contractual calculation, i.e. the employee's relevant daily pay, including any penal rates.

The effect of this comparison is that, if an employee's contractual pay for working on a public holiday is more than the statutory minimum payment, the contractual amount is paid.

Examples
1. Double time in employment agreement
An employee is paid $10 an hour for normal working hours. The employment agreement provides for double time, i.e. $20 per hour, for working on a Sunday. The employee works eight hours on Sunday, 26 December (Boxing Day), at the double time rate. Relevant daily pay is therefore $160, i.e. 8 × $20.

For working on Boxing Day, the employee is entitled to the higher of:

• the statutory calculation, i.e. the relevant daily pay, $160, less the amount of the penal rate, $80, plus half of the resulting amount, $40, = $120, and
  
  
• the contractual calculation, i.e. the relevant daily pay, including the penal rate = $160

The employment agreement is higher than the statutory minimum so the employee is entitled to $160.

Time and a quarter in employment agreement
An employee is paid $10 an hour for normal working hours. The employment agreement provides for time and a quarter, i.e. £12.50 per hour, for working on a Saturday. The employee works eight hours on Saturday, 1 January (New Years Day), at the time and a quarter rate. Relevant daily pay is therefore $100, i.e. 8 × $12.50.

For working on New Years Day, the employee is entitled to the higher of:

• the statutory calculation, i.e. the relevant daily pay, $100, less the amount of the penal rate, $20, plus half of the resulting amount, $40, = $120, and
  
  
• the contractual calculation, i.e. the relevant daily pay, including the penal rate = $100

The employment agreement is lower than the statutory minimum so the employee is entitled to $120.

Piece rate situation
An employee is paid $25 per bin of apples, plus $100 extra for working on a public holiday. The employee works on Sunday, 26 December (Boxing Day). If the employee picks 10 bins, relevant daily pay is $350, i.e. (10 × $25) + $100.

For working on Boxing Day, the employee is entitled to the higher of:

• the statutory calculation, i.e. the relevant daily pay, $350, less the amount of the penal rate, $100, plus half of the resulting amount, $125, = $375, and
  
  
• the contractual calculation, i.e. the relevant daily pay, including the penal rate = $350

The employment agreement is lower than the statutory minimum so the employee is entitled to $375.

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