With a large number of businesses not currently operating as they usually would due to Covid-19, many employers are wondering what they need to pay their employees for the upcoming statutory holidays.
This article considers two scenarios (1) where non-essential employees have been working from home over the lockdown period (albeit potentially in a reduced capacity) or (2) not working at all.
In general, employers are still required to pay their employees for statutory holidays that fall on a day that would have “otherwise been a working day” for the employee or if the employee has otherwise agreed to work on that statutory holiday (even if it not a usual working day for that employee).
However, as result of the Covid-19 lockdown, some employees are not able to work at all, giving rise to uncertainty about whether or not the upcoming statutory holidays would have “otherwise been a working day” for the employee or not. The Holidays Act does not cover off this situation.
The advice below is of a general nature so, if you are considering not paying your employees for the upcoming public holidays, we strongly recommend that you obtain legal advice specific to your situation before doing so. We are very happy to help if need be.
Non-essential employees working from home over Covid-19 who do not work on a statutory holiday
If an employee would have worked on a Friday or Monday (but for Good Friday or Easter Monday, for example), then that employee is entitled to be paid for that statutory holiday. This includes an employee who has been working from home over the lockdown period, albeit potentially in a reduced capacity.
In that case, employers must pay their employees not less than:
(a) The employee’s “relevant daily pay”; or
(b) The employee’s “Average daily pay” for that day.
These words have specific meanings under the Holidays Act. However, in general terms, “relevant daily pay” is the amount of pay that your employee would have received had the employee worked on the Friday (Good Friday) or the Monday (Easter Monday). It can include things like overtime, bonuses and the like, if your employee would have usually received those things as part of their pay.
Consequently, if you have agreed with your employees that, over Covid-19, their pay or hours of work will reduce, then their “relevant daily pay” will reflect those new agreed hours/days of work (making sure you still comply with Minimum Wage obligations).
Likewise, if you have applied for the Government Wage subsidy, and have agreed with your employees that you will only pay them the relevant subsidy amount each day, then that would be their “relevant daily pay” (again making sure you comply with Minimum Wage obligations).
However, if there has been no change to the employee’s pay, you will simply pay the employee their usual daily pay.
If you are able to work out “relevant daily pay”, then this will be the amount you pay your employees. If it is not possible/practicable to do so or the employee’s daily pay varies at the moment, then you would use “average daily pay”.
The employee’s average daily pay is calculated using this formula:
a. is the employee’s gross earnings for the 52 calendar weeks before the end of the pay period immediately before the calculation is made; and
b. is the number of whole or part days during which the employee earned those gross earnings, including any day on which the employee was on a paid holiday or paid leave; but excluding any other day on which the employee did not actually work.
Non-essential employee working from home over Covid-19 who do work on a statutory holiday
If, however, your employee actually works on the statutory holidays (so long as that is agreed as per their employment agreement), then they are entitled to be paid:
Time and a half, calculated at the greater of—
- the portion of your 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
- the portion of your employee’s“relevant daily pay” that relates to the time actually worked on the day.
If this would ‘otherwise be a working day’ for your employee, then they are also entitled to an alternative holiday.
Non-essential employee not working from home over Covid-19
The situation is less clear where a non-essential employee has not been working from over the Covid-19 lockdown (because it is not possible/practicable to carry out their usual duties from home due to the nature of their work).
The Holidays Act provides however that, where it is not clear whether a day would otherwise have been a working day, the employer and employee must attempt to reach agreement on this, taking into account such things as:
- What the employment agreement says – does it cover off what will happen in the event of a pandemic?
Some agreements provide that, in the event of a pandemic resulting in a shutdown, the employer will neither provide work nor pay the employee over that time and the employee will not be required to work.
- What is the employee’s usual work pattern, i.e. would they usually have worked that day, but for Covid-19, or does the employee generally only work for the employer when there is available work?
- Whether the employee usually works pursuant to a roster system and what that roster would have provided but for Covid-19.
If agreement cannot be reached, a Labour Inspector can be asked to decide the matter but we anticipate that will be unlikely to occur before the upcoming statutory holidays.
Ideally employers and employee will work hard to try and reach agreement as to how employees in these situations will be paid for the statutory holidays, taking into account both the circumstances of the employer and the employee. However, while, again, specific advice should be sought on your circumstances, our present view is that, if you have obtained the Government’ Wage subsidy, at a minimum that amount should at least be passed onto employees. This is based on our current understanding of the Wage Subsidy, which may change if the Government provides further guidance.
This article is not a substitute for legal advice and you should contact your lawyer about your specific situation. Our team is experienced with employment law. We would be happy to assist you in your journey. Please feel free to contact Hannah Carey at firstname.lastname@example.org or Lois Flanagan at email@example.com should you require assistance.