FBAPS and Public holiday worked remuneration for employees set to ADP

When FBAPS leave is processed in a pay run, employers may decide to go over and above the Holidays Act 2003 and remunerate the higher of ADP vs. RDP when an employee is set to ADP. With this feature, the business can choose to always remunerate the higher of ADP vs. RDP, or to always remunerate ADP regardless of whether it is higher or lower than RDP.

The new setting in a nutshell:

• This setting only applies to employees set to ADP. Employees set to RDP will always be remunerated with RDP.
• Setting location: Payroll settings > Leave categories
• Setting name: "Always use the higher of RDP vs. ADP when the employee's calculation method is set to ADP."
• Info tooltip: When enabled, the system will always compare RDP and ADP and apply the higher value to FBAPS leave processed in a pay run.
• For both existing and newly added businesses, the feature is ticked by default.
• For employees set to ADP:
  • If the feature is ticked, the system will use the higher of RDP vs. ADP.
  • If the feature is NOT ticked, the system will always use ADP regardless of whether it is higher or lower than RDP.

Section 50 of the Holidays Act 2003 stipulates that:

(1) If an employee works (in accordance with his or her employment agreement) on any part of a public holiday, the employer must pay the employee the greater of—
(a) the portion of the employee's relevant daily pay or average daily pay (less any penal rates) that relates to the time actually worked on the day plus half that amount again; or
(b) the portion of the employee's relevant daily pay that relates to the time actually worked on the day.

Because ADP is used when RDP cannot be determined, and because if an employee works on a given day RDP can be determined, this creates a grey area for employers. However, guidance from Employment NZ states that it is preferable not to apply ADP, as employees will likely expect to be paid for the hours they actually worked on a public holiday.

A new setting enables employers to remunerate public holiday worked at RDP x 1.5 or ADP x 1.5 for employees set to ADP.

The new setting in a nutshell:

• This setting only applies to employees set to ADP. Employees set to RDP will always be remunerated at RDP x 1.5 for public holiday worked.
• Setting location: Payroll settings > Pay categories > Public holiday worked
• Both tick boxes are mutually exclusive — ticking one will automatically untick the other.
• Ensure the selection is saved before exiting the pay categories area.
• This setting is only visible for the system pay category Public Holiday Worked, not for any other pay categories, including custom ones created by the business.

Regardless of employee setup — whether the employee is on default earnings, submits timesheets by exception, or submits timesheets for all time worked — if an employee works on a public holiday, a timesheet must be submitted, approved, and imported into a pay run. Unless a rule set has been configured to remunerate public holidays, the timesheet must be created using the system work type Public Holiday Worked, which is linked to the system pay category Public Holiday Worked. This triggers the correct remuneration in the pay run.

When a public holiday worked timesheet is approved and imported into a pay run, the following is automated:

• An earnings line for public holiday worked is generated.
• Remuneration defaults to the business-level setting (e.g. if RDP x 1.5 was selected, the system will apply this to the earnings line by default).
• If the employee is on default earnings, a reversal line is generated against their primary pay category.
• If the otherwise working day (OWD) test is met, one day of alternative holiday is accrued.
• The public holiday entitlement context panel can be opened by clicking the i on the earnings line.

The context panel contains the following information:

• The public holiday that triggered the remuneration. Public holidays can be viewed under Payroll settings > Business management > Public holidays.
• The otherwise working day (OWD) test outcome. For further details, see this article. If the OWD test is met, one day of alternative holiday is accrued automatically.
• Override options: Payrollers can override the default business-level remuneration at pay run level and select either RDP x 1.5 or ADP x 1.5.
• Ensure the selection is saved before exiting the context panel.
• The updated remuneration will be automatically populated in the earnings line's rate field.