Trade businesses operate on tight margins and rely on a mobile workforce. In 2026 the Holidays Act enforcement has tightened, and a single breach can trigger an audit from WorkSafe or a costly employee grievance. Getting public holiday pay right protects your reputation, avoids penalties, and keeps skilled tradies motivated.
Key Holiday Act rules for tradie staff
Under the Holidays Act 2003, every employee (including casuals who work regular hours) is entitled to:
- Paid public holiday if the day would normally be a workday for them and they do not work that day.
- Alternative holiday (a day off with pay) if they do work on the public holiday, plus time‑and‑a‑half for the hours worked.
- Overtime rates apply only if the employee’s contract specifies overtime on a public holiday; otherwise the 1.5× rate is the default.
Cost illustration (ordinary daily rate = $200, hourly rate = $25):
| Scenario | Pay owed |
|---|---|
| Employee does not work on a public holiday that is a normal workday | $200 (ordinary daily rate) |
| Employee works 4 h on a public holiday | $200 (alternative holiday) + 4 h × $25 × 1.5 = $150 → total $350 |
| Employee works a full 8 h day | $200 (alternative holiday) + 8 h × $25 × 1.5 = $300 → total $500 |
If the public holiday falls on a day the employee would not normally work, there is no entitlement to the paid day unless they actually work that day, in which case they receive time‑and‑a‑half only.
Employers must also keep accurate records of hours worked, the employee’s regular roster, and any alternative holiday taken, as required by WorkSafe and the IRD for PAYE reporting.
Step‑by‑step compliance checklist for small trade businesses
- Identify the employee’s ordinary work pattern – check the roster or contract to see which days are regular workdays.
- Mark the public holiday on your schedule – note whether each staff member is scheduled to work.
- Calculate pay – use the table above as a template: ordinary daily rate + 1.5 × hourly rate for hours worked, plus the alternative holiday pay if applicable.
- Record the transaction – log hours, pay calculation, and the alternative holiday taken in your payroll software (e.g., MYOB, Xero) and retain for at least 7 years.
- Communicate with the tradie – send a payslip that clearly shows “Public Holiday Pay” and “Alternative Holiday” items.
- Report to IRD – ensure the extra PAYE and ACC levies on the higher rate are included in your monthly filing.
- Offer the alternative holiday – schedule the day off within 4 weeks of the public holiday, or negotiate a different arrangement in writing.
- Review annually – at the start of each year, confirm that your contracts reflect the current Holidays Act provisions and that your payroll system is set up to auto‑apply the correct rates.
Common pitfalls and how to avoid them
• Assuming casuals are exempt – many casual tradies who work a regular pattern are covered by the Act. Verify each worker’s status. • Missing the alternative holiday – some employers pay the time‑and‑a‑half but forget the paid day off, leading to under‑payment claims. • Using the wrong rate – applying overtime (double time) instead of the statutory 1.5× can inflate costs; conversely, paying only the ordinary rate breaches the Act. • Poor record‑keeping – without clear rosters and timesheets, you cannot prove compliance if WorkSafe audits you. • Failing to adjust for “Mondayisation” – when a public holiday falls on a weekend and is Mondayised, the same rules apply as if it were on a weekday.
Address each of these by updating contracts, training your payroll admin, and running a quarterly compliance audit.