Managing Leave and Public Holidays for Casual Employees this Christmas

Understanding leave entitlements for Christmas casual employees can feel overwhelming. This article will clarify how leave works for casual staff in New Zealand. To help you feel equipped for a busy season there will also be guidance on public holiday payroll and final pays.

Christmas can be a stressful time for employers, but with some knowledge and a helpful payroll system, it doesn’t have to be. 

What Casual Employment Means in New Zealand

Our Employer’s Guide to Casual Employees has more detail on what casual employment means, but to save you time here’s a quick summary.

Signing a casual contract in New Zealand generally means the employee has no guaranteed hours, no regular work patterns, and no ongoing expectation of employment. Although these factors are not clearly defined in employment legislation, this is the usual set-up - especially for Christmas casuals. 

But casual employment doesn’t automatically equal no rights. If they meet the criteria, casual employees are still entitled to different types of leave, public holiday pay, and a fair termination process. More on that later. 

Annual Leave Entitlements for Casual Employees in New Zealand

Every single employee has annual leave entitlements in New Zealand. Regardless of their contract, employees are eligible for four weeks of annual holidays each year. 

There are two ways casual employees can receive this holiday pay:

• Paid to the employee at the time they take annual leave (like regular permanent employees),

• or it is included in their weekly paycheck as Holiday Pay as You Go (HPAYG). 

Employers can use HPAYG for their casual workers if they work very irregularly, or if they have been hired on a fixed-term contract for less than 12 months. This often means HPAYG is the best way to manage holiday pay for Christmas casual workers if they meet the criteria. 

Casual employees who take annual leave like normal will accrue holiday pay. Any holiday pay and current leave due will be paid out when they finish employment. 

Processing annual leave and HPAYG for your employees can be simplified with a compliant payroll system. In PayHero, annual leave calculations and rates are based on the employee’s work pattern and timesheets. Or, if HPAYG is applied in the employee Settings, it will be automatically calculated at 8% of their earnings. 

Sick Leave for Casual Employees in New Zealand

So, what about the other types of leave? Well, unlike annual leave and HPAYG, employees only become entitled to sick leave if:

• They have been working for the employer for 6 months, and 

• they have worked an average of at least 10 hours per week, and 

• at least one hour per week or 40 hours a month

This means paid sick leave for casual employees is not applicable if they’ve recently been hired for Christmas time. 

For employees who do fit the above criteria, 10 days of sick leave will be added to their balance on their 6-month anniversary. Sick Leave rates are calculated in payroll at the employee’s Relevant Daily Pay, or Average Daily Pay if that’s not possible. 

Employee Bereavement and Domestic Violence Leave entitlements have the same criteria as sick leave. 

Paying Casual Employees for Public Holidays in New Zealand 

Casual employees are entitled to payment for public holidays if it’s a day they would normally work, also known as an Otherwise Working Day (OWD). To figure out if the public holiday is an OWD, take advantage of MBIE’s OWD calculator. 

Casual staff are to be paid time and a half if they work on a public holiday, and they are also entitled to an Alternative Day (day in lieu) if it’s an OWD. 

Here are the upcoming Christmas and New Year Holidays (2022/2023):

• Christmas Day: Sunday 25 December or Tuesday 27 December (Tuesdayised)

• Boxing Day: Monday 26 December

• New Year’s Day: Sunday 1 January or Tuesday 3 January

• Day after New Year’s Day: Monday 2 January 

This year, Christmas Day and New Year’s Day are both Tuesdayised. It sounds complex, but this essentially means employees will still be paid for the public holiday if they don’t typically work on Sundays, but do work Tuesdays. 

Read more details in our public holiday payroll guide or rely on PayHero to take the right data and calculate everything correctly. 

What to do when Casual Employees Finish after Christmas

Many casual employees are on fixed-term contracts or they will leave employment after the busy Christmas season. The notice period an employee provides should depend on what is in their employee agreement. 

To complete a Final Pay in New Zealand, any applicable hours worked in the notice period, plus any holiday pay and current leave due, needs to be paid out. Employees who receive HPAYG won’t receive any holiday pay or current leave due. 

There are a few other factors to consider, which you can learn about in our Final Pays guide. Thankfully, a great Kiwi payroll system will do the heavy lifting for you and tidy up all the loose ends for your Christmas employees. 

Use compliant Kiwi payroll to manage leave entitlements

As you’ve read, New Zealand legislation makes managing casual employees quite the undertaking. Fortunately, our payroll product is built with you in mind. Thousands of businesses across the country trust PayHero to calculate casual worker entitlements, including our friends at 1154 and Scopa in Wellington. Check out how PayHero helps them succeed.

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