There’s a new feature that has been released this year in MYOB Exo Payroll to better cope with the legal compliance around employee leave.
For employees, under the Employee Maintenance screen, go to the Holiday Pay tab, then under Ordinary Daily Rate (this might say Ordinary Hourly Rate) you can select where to obtain the daily/hourly rate for Ordinary Pay calculation:
- Standard Pay – the daily/hourly rate is taken from the employee’s Standard Pay. If the Standard Pay is not defined, i.e. the Standard Pay gross is zero, the system will use the 4 Week Average.
- 4 Week Average – the daily/hourly rate is calculated using the last four weeks’ earnings, regardless of what is in the Standard Pay. This is useful for casual employees who work irregular hours, or employees who have a basic pay but often have extra earnings to be included in the calculation for leave, such as regular overtime or commissions.
- Higher Rate – the employee’s rate will be the higher of their Standard Pay or 4 Week Average rate. This option can be useful for cases like employees who occasionally work overtime, but mostly work to their Standard Pay, e.g. employees doing seasonal work.
Please note, while I’m not a legal advisor, I’ve spent 5 years offering payroll software support, and it is my understanding that under most circumstances you are obliged to choose the higher of the 4 week average or the Standard Pay when paying holiday leave. The exceptions are mostly around casual staff and true part-time employees.
Please note, the Higher Rate option makes holiday pay easier to handle for most employers, but you will still need to monitor all other kinds of leave to make sure the correct rate is being used for your situation.
For full advice, please consult your legal advisor or the Ministry of Business, Innovation and Employment (MBIE).