Q: I just wanted to confirm with NZPPA that the Gross taxable 52-week historical earnings should be divided by the 52 weeks and then divided by the current contract agreed terms stipulated hours for the week. The part-time employee is issued a new IEA adjustment letter with each decrease/increase of hours with pro-rata salary amount.
The system updates the weeks of Annual leave so if they have an equivalent of 4 annual leave weeks before the change they still have 4 weeks equivalent after the change ie very basically if the new hours are less than the previous contract then the AL rate goes up normally the AWE would be the highest rate here, and if the hrs change is an increase then the minimum AL rate to be paid is the OWP (if by chance the AWE is higher than that would be paid ).
Note the annual leave is still paid in hours,there was no overtime or additional hours worked -hours worked are as per the contract that was applicable at the time.
So, my question is should the annual leave rate for the attached be:-
- Gross taxable earnings $53,238.59/52 weeks/20 contracted weekly hrs = AWE 51.19 ( highest rate). Which I believe is correct, no secondary rate apply here? ( as the system has updated new contract hours & weeks of leave each time the contract has changed.)
or - Gross taxable earnings $53,238.59/1180 hours worked = 12 per hour /OWP =46.30-highest rate OWP.
A: AWE must be divided by 52 as per the act and not hours because if hours are used and they change it can change the value of a week to what it is now whereas the standard divisor of 52 gives an average for a week over the 12 months of earnings.
Section 5 Interpretation
(1)
In this Act, unless the context otherwise requires,—
annual holiday means an annual holiday provided under subpart 1 of Part 2
authorised representative, in relation to an employee, means a person who is authorised under section 236 of the Employment Relations Act 2000 to represent the employee
average daily pay means a rate of pay calculated in accordance with section 9A(2)
average weekly earnings means 1/52 of an employee’s gross earnings
Average weekly earnings
Average weekly earnings are worked out by calculating the employee’s gross earnings over the 12 months prior to the end of the last payroll period before the annual holiday is taken, and dividing that figure by 52.
So this is the right way for AWE to be applied: Gross taxable earnings $53,238.59/52 weeks/20 contracted weekly hrs = AWE 51.19 ( highest rate). Which I believe is correct, no secondary rate apply here? ( as system has updated new contract hours & weeks of leave each time contract has changed.)