For many small business owners, summertime is a season of stress.

With kids out of school and employees taking vacation days, it can be hard to maintain a regular schedule.

And on top of that, there’s the pressure of ensuring everyone gets paid on time.

Payroll can get a bit more complex during the silly season, so we’re sharing some special tips for you.

But first, we want to share with you the differences between holiday pay and annual leave entitlements:

Annual Leave

Annual Leave is one of the most important benefits that an employee can receive. It is a chance to take a break from work, enjoy life, and recharge their batteries. So what exactly are the entitlements for Annual Leave?

An employee is entitled to 4 weeks of annual leave after working for 12 months of continuous employment.

The 4 weeks of Annual Leave gets added in one lump after 12 months of employment and then every 12 months after that. So, until an employee has worked for 12 months, there is no Annual Leave.

The balance of how much Annual Leave is accrued is held in Weeks, not in a $ value.

When an employee takes Annual Leave, the $ amount to be paid out is based on standard current earnings or an average.

It is not a set $ value based on what has been earned in the past.

For more information about annual leave entitlements please refer to the Employment New Zealand website.

If you want help calculating your employee’s entitlements, please do not hesitate to call us.

Holiday Pay 

Holiday pay, on the other hand, is a percentage of an employee’s regular wage that they will receive when taking time off for holidays.

Holiday Pay is what an employee is entitled to up until when Annual Leave is given at the 12-month mark.

Holiday Pay is generally calculated as 8% of gross earnings.

Holiday Pay is generally only paid out when employment ends. It should generally not be paid out during employment (unless casual and being paid every week with no annual leave to be accrued).

When Annual Leave is given to the employee after 12 months of employment, the Holiday Pay balance is taken out and returns to Nil. Effectively the $ value 8% of gross earnings is replaced by the 4 weeks of Annual Leave.

The week after the Annual Leave has been accrued, and the Holiday Pay has gone back to Nil, the Holiday Pay starts to accrue again. It will continue to build up for the next 12 months. After another 12 months, more Annual Leave will be accrued, and the Holiday Pay balance will go back to Nil again.

Now back to those tips.

Getting it sorted early: It pays to plan ahead and get your payroll sorted before the holiday season kicks off. Speak with your accountant or bookkeeper, and make sure you’re well informed on employees’ entitlements.

Identifying public holidays: Know when each public holiday is to avoid any payment discrepancies.

Establishing a budget: Factor any extra costs into your budget, such as overtime and additional employees you may need to hire for the summer season.

Staying organized: Create a payroll schedule that ensures everyone gets paid on time and also makes sure that all entitlements are accounted

Calculating the correct amount: Make sure you use the correct pay rate when calculating an employee’s holiday pay.

Review payroll policies: Review your payroll policies and remind employees of their entitlements in advance. This will ensure everyone is on the same page and clear about expectations

Every year, businesses across the country close their doors for a period of time. This is known as a closedown period. While some organisations stay open all year round, others may choose to close down for a week or two. Whatever the case may be, it’s important to remember that if your business has an annual closedown, you need to give your employees at least 14 days’ written notice. This is so that the appropriate leave arrangements can be put into place.

Preparing for the holiday season can be daunting, but with a little bit of planning and organisation, it doesn’t have to be.

By following these tips, you can ensure that your business is prepared for the holiday season ahead.

Finally, don’t forget to take time out for yourself!

The holiday season should be enjoyed and embraced, so make sure you’re taking time for yourself to relax and unwind.

Book your FREE Discovery Call and see how can you make a difference in your business today!

Good luck this summer season! Enjoy the sunshine!

Running a business is not always easy and change in inevitable. Times and trends will change and there will come a time that you need to adapt. Learn more about embracing change on reading what happened to Kodak and Blockbuster.

Are you struggling to make your business work?

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