Alternative Holidays For Hospitality Employers In NZ

Amelia runs a busy waterfront restaurant in Auckland. Matariki is one of her biggest trading days, so she rosters extra floor staff, two chefs and a kitchen hand. Payroll day comes around, and suddenly the tricky question appears: who gets an alternative holiday, and who just gets public holiday pay?

If you run a cafe, bar, restaurant, catering business or hotel, public holidays can be some of your busiest days. The rules are manageable once you know the pattern, but they do need careful record keeping.

For hospitality employers, the main thing to remember is this: working on a public holiday doesn't always mean your staff get an alternative holiday. It usually depends on whether that public holiday was an otherwise working day for that employee, although there's a specific exception for employees employed only to work or be on call on public holidays.

What Is An Alternative Holiday In New Zealand?

An alternative holiday is a paid day off that an employee may earn after working on a public holiday.

You might hear it called a day in lieu. Under the Holidays Act 2003, an alternative holiday isn't extra wages for the day worked. It's a separate paid day off to recognise that the employee worked on a public holiday that they would usually have worked anyway.

New Zealand has 12 public holidays each year, including Christmas Day, Boxing Day, New Year's Day, 2 January, Waitangi Day, Good Friday, Easter Monday, ANZAC Day, Matariki, King's Birthday, Labour Day and the relevant provincial anniversary day.

For hospitality businesses, these days often create three separate questions:

• Did the employee work on the public holiday?
• Was that day an otherwise working day for that employee?
• Have you paid and recorded the entitlement correctly?

If you get those three questions right, you're usually well on the way to handling public holidays properly.

When Do Staff Earn Alternative Holidays?

Staff earn an alternative holiday when they work on a public holiday that would otherwise be a working day for them, unless they're employed only to work or be on call on public holidays.

This means, for most employees, two things need to be true at the same time:

• The employee actually works on the public holiday, even for part of the day.
• If it had not been a public holiday, the employee would otherwise have worked that day.

If both are true, the employee gets paid at least time and a half for the hours they work and also earns one whole alternative holiday, unless the statutory exception applies.

If the employee works on a public holiday but it wasn't an otherwise working day for them, they still get paid at least time and a half for the hours worked. However, they don't earn an alternative holiday.

Similarly, if an employee is employed only to work or be on call on public holidays, they must still be paid at least time and a half for any work on the public holiday, but they don't earn an alternative holiday.

That distinction is where many hospitality payroll mistakes happen.

Example: Regular Friday Shift

Say Amelia's restaurant has a chef, Sione, who works Tuesday to Saturday every week. Matariki falls on a Friday, and Sione works a full shift.

Friday is clearly an otherwise working day for Sione. Amelia needs to pay him at least time and a half for the hours he worked on Matariki, and Sione also earns one alternative holiday.

Example: Extra Casual Shift

Now say Amelia asks Taylor, a casual server, to help on Labour Day Monday because the restaurant is short staffed. Taylor usually works Friday and Saturday nights and doesn't normally work Mondays.

Taylor must be paid at least time and a half for the hours worked on Labour Day. But if Monday isn't an otherwise working day for Taylor, Taylor doesn't earn an alternative holiday.

Casual staff can still have otherwise working days if there's a real pattern to their work. The label in the employment agreement isn't the end of the story.

How Do You Decide If It Is An Otherwise Working Day?

You decide whether a public holiday is an otherwise working day by looking at the employee's real working pattern, not just the roster for that week.

The Holidays Act 2003 lists factors you should consider. For hospitality employers, the most useful ones are usually:

• what the employment agreement says about the employee's days and hours
• the employee's regular roster or work pattern
• whether the employee works only when work is available
• the employee's recent work history
• any reasonable expectations you and the employee have about when they work
• whether the employee would have worked that day if it wasn't a public holiday

This can be straightforward for full-time staff with fixed days. It can be harder for casuals, part-time staff and employees on rotating rosters.

A practical way to approach it's to ask: if this public holiday had been an ordinary day, would you have expected this person to work?

If the answer is yes, treat it as an otherwise working day. If the answer is genuinely no, they may still receive time and a half if they work, but not an alternative holiday.

Rotating Rosters

Rotating rosters need a bit of care. If an employee works a regular rotating pattern, a public holiday can still be an otherwise working day even if the roster changes from week to week.

For example, if your front-of-house manager works five days per week on a rotating roster and is rostered to work Easter Monday as part of their normal cycle, that may well be an otherwise working day.

What you want to avoid is manipulating the roster around public holidays to avoid entitlements. That can quickly create payroll risk and trust issues with your team.

Casual Employees

Casual employees can be tricky because many hospitality businesses use them during busy periods.

If a casual employee only works occasionally, with no pattern and no expectation of work, a public holiday they pick up may not be an otherwise working day. But if they work almost every Monday, and the public holiday falls on a Monday, they may be entitled to an alternative holiday if they work that day.

Look at the reality of the arrangement. Payroll should match what is actually happening in the workplace.

Do You Have To Pay Time And A Half As Well?

Yes, if an employee works on a public holiday, you must pay them at least time and a half for the hours they work.

This is separate from the alternative holiday. For employees who work on a public holiday that's an otherwise working day, the usual position is:

• they're paid at least time and a half for the hours worked on the public holiday
• they earn one alternative holiday, unless they're employed only to work or be on call on public holidays

If they work on a public holiday that isn't an otherwise working day, the usual position is:

• they're paid at least time and a half for the hours worked
• they don't earn an alternative holiday

If an employee doesn't work on the public holiday, but it's an otherwise working day for them, they're generally paid for the day as if they had worked it. They don't earn an alternative holiday because they didn't work the public holiday.

For payment calculations, the Holidays Act uses concepts like relevant daily pay and average daily pay. In plain English, relevant daily pay is what the employee would have earned on that day, including regular payments that form part of their pay. Average daily pay may be used in certain cases, such as where daily pay isn't clear or practical to calculate because hours and pay vary.

Hospitality pay can include variable hours, allowances, penal rates and overtime, so your payroll settings need to be accurate. A small setup issue can snowball over multiple public holidays and multiple staff.

Can You Require Staff To Work On A Public Holiday?

Sometimes, but you need the right contractual basis and the public holiday usually needs to fall on a day the employee would otherwise work.

Under the Holidays Act 2003, you can only require an employee to work on a public holiday if:

• the public holiday falls on a day that would otherwise be a working day for that employee, and
• their employment agreement says they may be required to work on a public holiday.

If those conditions aren't met, you can ask the employee to work, but you generally can't require it. For a hospitality business that trades on public holidays, your employment agreements should deal clearly with public holiday work, rosters and availability.

This doesn't mean every staff member must work every public holiday. It means your contracts and rostering practices should match how your business actually operates.

For example, if your cafe opens every public holiday except Christmas Day, your employment agreements shouldn't read as though public holidays are always days off. On the other hand, if someone is hired for weekday breakfast shifts only, your contract shouldn't overreach by suggesting they can be rostered for any public holiday at any time.

If you use independent contractors in your hospitality business, use a clear statement of work and remember that Holidays Act entitlements generally apply to employees, not genuine contractors. That said, misclassifying someone as a contractor can cause employee or contractor status problems. Employment status rules are also being updated through the Employment Relations Amendment Act 2026, including the contractor gateway test, so it's worth getting tailored advice if your staffing model relies on contractors.

How Should You Record Alternative Holidays?

You should record alternative holidays as soon as they're earned, and keep enough detail to show why the entitlement was given or not given.

Under New Zealand employment law, you need to keep wage, time, holiday and leave records, and handle employee privacy carefully. These records must generally be kept for 6 years. In practice, your records should make it easy to answer questions from staff, payroll, MBIE Labour Inspectorate or your accountant.

For each public holiday, record:

• which public holiday it was
• whether the employee worked
• the employee's start and finish times
• whether the day was an otherwise working day
• the time and a half payment made
• whether an alternative holiday was earned
• when any alternative holiday was later taken or paid out

It's also useful to keep copies of rosters, approved shift swaps and any public holiday staffing communications. These can help if there's a later question about whether the day was an otherwise working day.

Payroll Setup Tips

Your payroll system should be set up to treat public holidays consistently. For hospitality employers, this usually means checking:

• whether public holiday rates are correctly loaded
• whether alternative holidays accrue only when the employee is eligible
• whether managers know which payroll code to use
• whether casual staff are being assessed properly rather than automatically excluded
• whether unused alternative holidays appear in leave balances

Templates and generic payroll settings often miss the details of how your business actually rosters people. Your documents and systems work best when they're tailored to your venue, trading hours and staffing model.

When Can Staff Take Or Cash Up An Alternative Holiday?

Staff should take an alternative holiday on a day agreed between you and the employee, and it's paid as a normal paid day off.

An alternative holiday is one whole working day off, even if the employee only worked part of the public holiday. For example, if an eligible employee works a four-hour shift on a public holiday, they still earn one alternative holiday.

When the employee takes the alternative holiday, you pay them using the Holidays Act rules for relevant daily pay or average daily pay. The right calculation depends on their work pattern and pay arrangements.

If you and the employee can't agree on when the alternative holiday will be taken, you can choose a reasonable date and give at least 14 days' notice. It's best to use this carefully and keep a written record of the discussion.

An employee can request to exchange an alternative holiday for payment only after 12 months have passed since the entitlement arose. If you agree to the employee's request, you must pay the agreed amount as soon as practicable.

You can't simply cash up alternative holidays whenever it suits payroll. If the employee leaves your business with unused alternative holidays, your termination documents should record the payout in their final pay.

What Are Common Mistakes Hospitality Employers Make?

The most common mistake is treating all public holiday shifts the same. In reality, staff may have different entitlements depending on their normal work pattern.

Here are the issues that often cause problems for cafes, restaurants, bars and hotels:

• Automatically giving everyone an alternative holiday: This can overstate leave balances for staff who worked a public holiday that wasn't otherwise a working day, or who fall within the exception for employees employed only to work or be on call on public holidays.
• Automatically denying casuals alternative holidays: A casual employee with a regular pattern may still have an otherwise working day.
• Only paying time and a half: If the employee worked on an otherwise working day, they may also be owed an alternative holiday.
• Not checking Mondayised holidays: Some public holidays are observed on a Monday or Tuesday for employees who don't normally work the calendar date. Employees only get one entitlement for the holiday, so you need to identify the correct day for that employee.
• Relying on memory: Public holiday decisions should be recorded at the time, not reconstructed months later.
• Using contracts that don't match trading reality: If your venue opens on public holidays, your employment agreements should say when staff can be required or asked to work.

Mondayisation deserves a special mention. Christmas Day, Boxing Day, New Year's Day and 2 January can transfer to a Monday or Tuesday in certain circumstances. Waitangi Day and ANZAC Day can transfer to the following Monday. This can affect which day is treated as the public holiday for a particular employee.

For example, if Waitangi Day falls on a Saturday, an employee who normally works Saturdays may have their public holiday entitlement on the Saturday. An employee who doesn't normally work Saturdays may have it observed on the Monday. Getting this right helps you avoid both underpayments and double counting.

Key Takeaways

• Staff earn an alternative holiday when they work on a public holiday that's an otherwise working day for them, unless they're employed only to work or be on call on public holidays.
• Anyone who works on a public holiday must be paid at least time and a half for the hours worked.
• The otherwise working day test depends on the employee's real work pattern, not just their job title or whether they're called casual.
• Alternative holidays are one whole paid working day off and should be recorded as soon as they're earned.
• Keep wage, time, holiday and leave records for 6 years, including rosters and public holiday decisions.
• Your employment agreements and payroll settings should match how your hospitality business actually trades on public holidays.

If you'd like help with your employment agreements, public holiday clauses, rostering policies or payroll entitlement processes, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.