8th February, 2016
In modern working environments, businesses need to consistently adapt to the demands of our changing economy.
Employees’ work patterns regularly change. Sometimes it’s to suit the demands of the industry they work in. Other times, they require time away from work for family reasons or to pursue other interests.
These changes can impact on employees’ entitlements across the board. It’s important that employers keep on top of these changes through updating their contractual agreements, and communicating these changes to their HR and Payroll teams.
Communication breakdowns can result in problems, often months down the track. If an employee complains about or questions the payment of leave taken or their entitlement balances, it can be time-consuming, frustrating and costly to reconcile these leave balances and work out backpays for the employee.
A working understanding of the Holiday’s Act 2003 is crucial.
Every permanent employee is entitled to four weeks of annual leave per year. Every payroll will either accrue this time in days or hours, so if the employee’s working hours change during the year, it’s important that this is updated in the employee’s entitlement set-up as well. It may require a pro-rata of that year to deal with an inconsistent work pattern, or a new agreement to the new four-week pattern, as their entitlement will be due at their next annual leave anniversary date.
The other part to annual leave is the payment or value of the time taken. This may also require adjustment due to the employee’s work pattern changing.
For example, manufacturing demands can result in working hours that need to be extended in order to meet the demands of production. The employee may go from working a normal eight-hour day, five days per week to a 12-hour day or night shift three days per week, and then change back again depending on production demands. Another example might be employees who want more time away from work due to family demands, and agreeing to work shorter hours per day or have varying hours on different days.
When this happens it’s important to determine whether or not this will affect the employee’s entitlement to leave. If it does, their employee agreement will need to be updated, and payroll will need to be notified of the changes so they can make the appropriate adjustments to entitlements and calculations for paying that employee’s leave.
The employee’s relevant daily pay for sick leave, bereavement, public holidays and alternative leave might also need to be updated, as increasing or decreasing the employee’s hours can impact on these calculations. Sick leave entitlement can also be overlooked when work patterns change – if sick leave entitlement is being calculated in hours, this will need to be translated into days according to the employee’s new work pattern.