Irregular Hours Employees

When you have employees whose work hours/days differ from one week to the next, it can be difficult to determine what a week is. Although all employees are entitled to 4 weeks of leave, if you are unable to identify a work pattern for your employee, you may need to consider the days and hours the employee has worked leading up to them taking leave

Our payroll platform averages over a given number of weeks, between 2 - 8 weeks, and calls this the review period for employees with irregular work hours. It will consider either the advanced work pattern or the submitting timesheets in this calculation.

Set the review period at a business level

You can set the review period at the business level from within the Leave Categories page. First, log into your payroll platform. Next, go to your Payroll Settings model and access the Leave Categories page. You wil then need to change the number of weeks in the Irregular Hours Work Pattern Review Period field. It will default to four weeks, but you can choose any value from two to eight weeks depending on your needs.

Screenshot of where to set the irregualr hours work setting

Set the review period at an employee level

You can also set it at the employee level if you require different review periods for some employees. First, log into your payroll platform. Next, go to the Employee List module and select or search for the employee who needs their review period changed. Then, go to the employee Pay Rates page and enter from two to eight weeks in the Irregular Hours Work Pattern Review Period field 

Next, go to the Pay Run Defaults page and make sure you have ticked the Irregular Employment tick box. It will guarantee the platform uses the review period when the employee takes leave.

Screenshot of where to add in the irregular hours work pattern

What does the review period do?

When you select the Irregular Employment tick box for an employee. When they go to take annual holidays, the platform will first look at their timesheet data to determine the number of hours you have paid them during the review period. It will then divide that by the number of weeks in the review period to get the average weekly hours. For example, the company work week is Monday to Sunday and the employee is applying for leave on the Wednesday of that week.

The review period is set to four weeks and the employee has worked 83 hours over that 4-week period. So the calculation will be 83 / 4 = 20.75, which is the average the platform will use to convert the hours requested into weeks.

Advanced work pattern

If the employee has a recurring work pattern over several weeks, you can enter an advanced work pattern of up to 8 weeks. To enter an advanced work pattern, go to the Employee List module and Select or search for the employee. Next, go to the Pay Run Defaults page and click the Advanced button.

Add the first week reference date, which will be the start date of the first week, then enter the start/stop times or just the number of hours they work on the days they would normally work. You can then add further weeks as required. At the end of the last week the work pattern will revert to the beginning and start at week 1 again.

Screenshot of where to add in the standard work hours

Leave setup and leave application for irregular hours employees

Employees who work irregular hours should always be setup to accrue four standard weeks per year to guarantee compliance with the Holidays Act (2003). Due to the nature of hours and days, being irregular, to set them up with anything, but four weeks would not make sure they would get their full entitlement.

When employees apply for leave, they can apply in hours, days or weeks and when the leave is imported into the pay run, the platform will use the averaging period to convert the leave back to weeks for the reduction of their leave balance.

Screenshot of where to create leave requests

How do hours taken get converted to weeks?

When an employee applies for leave in hours, the platform converts those hours into weeks using the review period. Using the example where the employee is set to a review period of four weeks, they have worked 83 hours over that four week period giving them an average of 20.75 hours and they apply for four hours of leave the conversion will be four / 20.75 =.19 of a week.

Warning

When employees have no regular hours, we can only determine a week at the time they take their annual holiday. It is MBIE’s view that the employer and employee should first try to identify whether there is a pattern of work. If a work pattern genuinely cannot be established, then consideration of the days and hours the employee has‌ been working in the weeks leading up to the holiday can be used.

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