Holidays Act Reform Q & A Part 1

It is not simply a daily or weekly test.

Standard hours are the hours an employee may be required to work under their employment agreement and for which the employer must pay them, whether or not work is provided. Hours worked under an availability provision are excluded.

The employee’s standard hours need to be identifiable from their employment agreement, work roster or, where required, a notional roster. In this example, if the agreed pattern is three 10-hour days, the employee’s standard hours would ordinarily be 10 hours on each rostered day, totaling 30 hours for the week. Paid breaks associated with those hours are included.

Generally, yes.

The additional hours should be paid on the employer’s usual payday for the pay period in which they were worked, in line with the employment agreement and normal payroll arrangements.

The 12.5% leave compensation payment must be paid when the employee is paid for those additional hours. It is not added to a leave balance. If payroll cut-off timing means the hours cannot be processed in that pay run, they should be paid in the next practicable pay run, subject to the employment agreement and wage payment requirements.

Yes, provided 44 hours are the employee’s standard hours.

If the employment agreement provides for the employee to be separately paid for hours worked above 44, the extra six hours will be additional hours. The employee must receive their ordinary pay for those hours, plus a leave compensation payment equal to 12.5% of the relevant payment for the additional hours.

That payment replaces annual and sick leave accrual on the additional hours. However, if the employment agreement makes all 50 hours standard hours, the 12.5% payment would not apply.

No.

Under the new Act, standard hours do not receive an 8% holiday pay payment. Instead, annual leave accrues at 0.0769 hours for each standard hour, while sick leave accrues separately at 0.0385 hours for each standard hour, subject to the statutory cap.

The 12.5% leave compensation payment applies to additional hours and casual hours because annual and sick leave do not accrue on those hours. The current 8% pay-as-you-go model continues until the new Act takes effect on 6 August 2028.

The wording of the employment agreement will be critical.

A range does not automatically make every hour up to the maximum a standard hour. If the agreement guarantees only 30 hours, and hours from 31 to 45 depend on work being offered and accepted, the employee’s standard hours will generally be 30. The remaining paid hours are likely to be additional hours.

However, if the agreement and roster require the employee to work a particular number of hours within that range for the relevant period, and the employer must pay those rostered hours, those hours may be standard hours. Agreements that use ranges should clearly identify the guaranteed hours and explain how any hours above that level are offered, accepted and paid.

No. The 12.5% is one payment.

For each additional hour, the employee receives a leave compensation payment equal to 12.5% when that hour is paid. It is not split into 4.5% paid now and 8% accrued for later.

Annual and sick leave do not accrue on additional hours. The 12.5% payment compensates for both entitlements. Annual and sick leave accrue separately on standard hours only.