Irregular employment is a payroll situation where an employee’s work hours and days differ from one week to the next and consequently, a work pattern cannot be determined.

It is MBIE’s view that employers and employees should first try to identify whether there is a pattern of work. Because we can only determine a week or a day at the time leave is taken, if a work pattern genuinely cannot be established, then the employee’s payroll data (days and hours the employee has‌ been working in the weeks leading up to the leave) can be used.

Note that the irregular employment feature is not compatible with an advanced work week. An advanced work week means that it differs from the standard 40-hour work week Monday-Friday 5 workdays a week, 8 hours a day. An advanced work week can still be determined and therefore does not fit the definition of irregular employment.

Every time leave is taken, the value of a week (annual leave) or the value of a day (FBAPS) have to be calculated. While this is straightforward for an employee on a standard work week, it becomes challenging for employees with an irregular work week.

When an employee is set up as an irregular employee, and when a leave request is applied to a pay run, the system will calculate a set of irregular employment data points for the review period:

• Hours worked remunerated
• Hours leave remunerated and unpaid
• Total hours in the review period (hours worked remunerated + hours leave remunerated and unpaid
• Days worked remunerated
• Days leave remunerated and unpaid
• Total days in the review period (days worked remunerated + days leave remunerated and unpaid)
• Irregular value of week in hours
• Irregular value of a day in hours
• Average days per week.

1. Log into your payroll platform. 
2. Click on Business on the left-hand side menu.
3. Click on Payroll Settings. 
4. Click on Leave Categories. 

5. Select Annual Holidays.

   Warning

   Annual holidays leave category must be set up in weeks (not in days or hours), and FBAPS must be set up in days (not in hours).

6. Select Automatically accrues - based on the employee's leave year.
7. Tick leave entitlement to start after and then add 12 months.
8. Tick Apply negative balances after termination. 
9. Tick Accrue in advance. 
10. Tick Report leave earnings against a specific pay category then select Annual holidays taken.

11. Tick Automatically accrues and then select Based on the employee's leave year. 

12. Tick Leave entitlement to start after then select 6 months. 

13. Tick Exclude from termination payout.  

14. Tick Accrue in advance. 
15. Click on Save.
    

1. Log into your payroll platform. 
2. Click on Business on the left-hand side menu.
3. Click on Payroll Settings. 
4. Click on Leave Categories. 
5. Select Sick leave.
6. Select Automatically accrues - based on the employee's leave year.
7. Tick leave entitlement to start after and then add 6 months.
8. Tick Exclude from termination payout. 
9. At Standard allowance, select 10 standard days per year.
10. Tick Accrue in advance.
11. At Accruals for this leave balance, select limited to a maximum of 10 days per year. 
12. Tick Report leave earnings against a specific pay category then select Annual holidays taken.
13. At Carry over, select a maximum of 10 days per year.
14. At Payment Setup, select Report leave earnings against a specific pay category, and then select Sick Leave Taken.
15. Click on Save.
    

• The review period start date is the day immediately before the pay run start date where leave is taken, e.g. if the pay run where the irregular conversion takes place starts on 01/03/2024 then the first day of the review period is 29/02/2024.
• The review period end date is defined as the review period duration set in weeks x 7 calendar days from the review period start date, into the past. From the start to the end date of the review period, with both these two days included, the review period should equal review period duration set in weeks x 7 calendar days.
• When an employee’s payroll data duration is shorter than that of the employee’s set review period (which will still be at least 2 weeks long), the system will go as far back as the employee's original start date (whether in EH payroll data or in HGE),count calendar days from the review period start date to the employee's start date and divide by 7 to get the quantity of weeks in the review period i.e. the divisor for the irregular value of a week.
• When employees are switched from default earnings (non timesheet) to irregular employment (timesheets submitted for all time worked), a minimum of 2 weeks of earnings on timesheet must be processed before the irregular employment feature can be ticked in the employee’s pay run defaults. Before then, best estimate should be made on the employee's work week and entered in the employee's pay run defaults.
• When the employee returns from a period of parental leave, a minimum of 2 weeks of earnings on timesheet must be processed before the irregular employment feature is ticked in the employee’s pay run defaults. Before then, best estimate should be made on the employee's work week and entered in the employee's pay run defaults.

• Use timesheets to submit all time worked. This is critical as the system looks at timesheet data to calculate the quantity of days worked in the review period.
• Standard work week: Though the system does not look at the standard work week when an employee is ticked irregular employment, payroll admins should endeavour to enter values that reflect closest approximation for both hours per week and hours per day.
• Leave allowance template: Standard entitlement (where leave categories are set up as per best practice illustrated above).
• Primary pay category: TTypically, this will be permanent ordinary hours or casual ordinary hours. You may decide to use a business-specific pay category.
• Irregular employment: Ticked.

ADP: As typically RDP (relevant daily pay) cannot be determined for an irregular employee, average daily pay would be used.

OWP 4 weeks: As typically OWP cannot be determined for an irregular employee, OWP 4 weeks would then be used.

Review period: 2 to 13 weeks.

Leave allowance template: Standard entitlement

Leave year should start on: Typically the employee’s start date or business decision (e.g. company wide common annual leave anniversary).

Unpaid annual holidays (LWOP): Business decision

All other settings will be transferred from the leave allowance template the employee is attached to.

52-week historical gross earnings (HGE) should be imported into Employment Hero Payroll to facilitate AWE (average weekly earnings) calculations (statutory requirement for annual leave).

Payroll admins must ensure that both days and hours for the respective pay periods in the HGE are stated to facilitate the calculation of the irregular value of a week and of that of a day when HGE fall within the review period.

• Leave (for any leave type) can only be requested in hours or in days. Payroll admins or employees do not know the irregular value of a week when they create a leave request and therefore cannot submit a leave request in weeks.
• Leave requests must be created for all leave taken, including unpaid leave, and applied to a pay run to trigger the irregular employment leave conversion. Note that applying a leave request to a timesheet will not trigger the irregular employment conversion. It will apply the quantity of daily hours stated in the employee’s pay run defaults. (To calculate the review period start and end dates, the system needs to know the pay run start date. This only happens at pay run level, not at timesheet level.)

In this example, the review period is set to four weeks.

In the 4-week period leading to the pay run where the employee is taking leave, 83 hours and 11 days worked and of paid/unpaid leave were processed.

The average value of a week will be 83 hours / 4 weeks = 20.75 hours.

The average value of day will be 83/11 = 7.55 hours.

The platform will use these values to convert hours or days of leave requested into weeks/days taken and hours remunerated.

• When hours worked are manually added to the pay run via actions add earnings, these hours will not be added into the total of hours in the review period.
• When the business has timesheets set up to allow paid breaks, when a timesheet is completed with paid or/and unpaid breaks, the system will look at the net remuneration data from the pay run i.e. only the unpaid break portion will be deducted from the total duration of the day and the outcome will be added into the total hours in the review period.
• When a timesheet is imported with quantity of hours = zero and the quantity of hours is subsequently populated in the pay run, then these hours populated in the pay run will be added into the total hours in the review period.
• When a leave request is applied directly to the pay run and the leave falls in a subsequent review period, the system will use the remuneration data to add leave hours into the total hrs in the review period. The system will retrieve the associated dates data from the leave taken data.
• Leave added manually to the pay run, i.e. processed in a pay run as actions take leave, will not be counted in the total hours in the review period.
• Leave adjustments i.e. processed in a pay run as actions to adjust leave, will not be counted in the total hours in the review period.
• For hours worked and leave hours to be added into the review period hours, the pay run in which those hours have been processed must be finalised.
• Fixed unit pay categories (e.g. bonuses, allowances) will not be counted in the total hours in the review period. Equally, where a work type in a timesheet is linked to a fixed unit pay category, the days will not be counted towards days of the review period.
• When an allowance is remunerated on an hourly basis, the pay category should be fixed and quantity of units must be added in accordance to the quantity of hours the allowance applies to. e.g. If an employee works 8 hours on a day and should also be remunerated a higher duty allowance of $25/hr, and additional timesheet line for the same date can be created with work type Higher duty allowance (linked to a fixed unit higher duty pay category) and a fixed unit value i.e. 8 entered.

When a casual employee is converted to permanent irregular, the system will use the casual payroll data (remuneration and timesheet data) to calculate the irregular employment data.

Example: A casual employee is converted to permanent part time irregular employment with a 10-week review period, effective 21/10/2023. If leave is processed in the first pay run starting on 21/10/2023, then the system will look at the existing payroll data processed when the employee was a casual from 12/08/2024 to 20/10/2024 to establish irregular employment data.