If you’re a small-to-medium-sized business, you might have questions about correctly calculating time and a half pay in New Zealand. Paying your staff in accordance with the latest employment laws and any existing agreements is vital to the smooth running of your organisation, attracting and retaining the best staff, and avoiding legal issues.
In this guide we take a close look at the definition of time and a half and how and when it applies to New Zealand businesses.
What is time and a half?
In simple terms, time and a half refers to the payment of 1.5 times (or an additional 50%) on the regular hourly wage rate for hours worked beyond the standard work hours (usually 40 hours per week in New Zealand).
How does time and a half work in New Zealand?
Your employees receive their usual hourly wage for a standard week, 40 hours. Once they exceed these 40 hours or agree to work public holidays, late nights or weekends, they may receive penal rates, in the form of time and a half, or double time, depending on legal obligations or agreements in place.
In some cases, companies are legally required to pay time and a half; in others, it’s commonly offered as an incentive to attract, motivate, and retain employees.
How to calculate time and a half
If your employee's usual hourly rate is $20 p/h, their time and a half rate would be 20 x 1.5 = $30.
Example of time and a half
Let's look at how to calculate overtime pay. Your baker usually works 40 hours a week at $25 an hour. This week, they baked up a storm and clocked up 45 hours, equating to five overtime hours. Here's how their weekly pay breaks down:
Standard 40 hours x $25/hour = $1000
Overtime 5 hours x $25/hour x 1.5 ($37.50/h) = $187.50
Total pay: $1000 + $187.50 = $1187.50
Why it’s important to understand time and a half
Understanding time and a half in NZ is crucial for managing your business and your team.
Compliance and avoiding penalties
It's a legal requirement to pay time and a half to employees working on public holidays. Depending on your company policies and collective agreements, you may also be required to pay time and a half for other types of overtime hours.
Failing to do so can lead to penalties and legal action.
Attracting and retaining talent
In a competitive job market, offering time and a half can be a valuable incentive for attracting skilled workers and encouraging them to stay with your company. It shows you value their time and commitment.
Predicting labour costs
Understanding time and a half enables accurate budgeting and forecasting of labour costs, especially for projects requiring overtime, or seasonal employment.
When does time and a half apply?
Navigating the complexities of when time and a half applies is essential for your business to remain compliant with employment law in New Zealand.
When is time and a half mandatory?
Public holidays
The minimum rights of employees in New Zealand require the payment of time and a half for all employees working on public holidays. Some industries and employee groups may negotiate higher rates of pay for working on public holidays, like double time (2 times the regular hourly wage).
When is time and a half commonly offered?
Overtime pay
Overtime pay typically kicks in when an employee surpasses the established standard working hours per week or day. According to the Employment Relations Act 2000, a standard work week for full-time employees in New Zealand is 40 hours. Overtime pay is usually calculated in addition to the hourly rate, expressed as time and a half or double time.
Overtime rates are not legally mandatory in New Zealand unless they are included in employment agreements. But many businesses choose to offer it as a way to attract, motivate, and retain staff.
Weekday overtime
Many employers offer time and a half for any hours worked beyond the standard 40-hour week, typically starting after the employee reaches their daily minimum hours. Some might pay double time for exceeding 45 or even 50 hours per week.
Weekend work
Working on Saturdays or Sundays, often triggers time and a half pay for many employees.
On-call pay
Some employers offer time and a half for on-call hours, even if the employee isn't actively working but must be available on short notice.
Who does time and a half apply to?
Permanent employees
You might be wondering: Do salary employees get time and a half in NZ? For permanent employees, time and a half can come into play when they exceed their standard working hours. This ensures employees are justly compensated for the additional time invested in their roles.
Casual employees
Casual employees on flexible work arrangements may also be entitled to overtime pay in the form of time and a half if they exceed the agreed-upon hours or work public holidays. Find out more about casual employment and your responsibilities as an employer.
Shift workers
Shift workers, who operate outside regular business hours can often expect time and a half for hours worked beyond their standard shift. Businesses with employees engaged in shift work need to factor in these additional rates when managing payroll.
Seasonal employees
Seasonal employees generally have the same rights to time and a half pay as permanent employees. They are entitled to receive time and a half on public holidays and may receive overtime pay depending on any specific agreements, applicable industry norms or collective agreements.
Industry-specific considerations
The prevalence and details of time and a half pay for overtime can vary significantly across different industries in New Zealand. Here's a look into some specific overtime pay considerations.
1. Hospitality and retail
Weekend and public holiday work: Due to extended operating hours, these sectors often have time and a half incorporated into the pay structure for weekend and public holiday shifts.
Split shifts: Irregular or split shifts often trigger time and a half for portions outside the main working hours.
Seasonal fluctuations: Busy periods like Christmas or holiday seasons might see increased overtime opportunities with premium pay rates.
2. Healthcare and emergency services
On-call and rotational shifts: Time and a half is common for on-call hours and irregular shifts like nights or weekends.
Overtime for essential services: Public hospitals and emergency services may have different overtime provisions in their collective agreements, balancing public needs with fair compensation.
3. Construction and trades
Site-specific variations: Depending on project deadlines and location, construction workers might see varying overtime rates, including time and a half or double time, for urgent work.
Travel time: Depending on the agreement, travel time beyond a certain distance to or from a worksite might be compensated with time and a half.
4. Transport and logistics
Delivery schedules and late runs: Drivers and logistics personnel often have overtime clauses for exceeding daily or weekly work hours, especially for late deliveries or peak season demands.
Split shifts and shift overlaps: Irregular schedules across different time zones might involve specific clauses for time and a half within certain hours.
5. Professional services (IT, law, finance)
Project deadlines and client demands: Overtime for meeting urgent deadlines or client requirements may be negotiated on a case-by-case basis, potentially involving time and a half or hourly bonus payments.
On-call availability: Specific roles like IT support or legal consultants might have on-call clauses with time and a half compensation for responding to urgent issues outside regular hours.
What days are time and a half in New Zealand?
In New Zealand, all employees who work on any of the official public holidays are entitled to receive at least time and a half pay, along with a day in lieu (another day off) if it's their usual working day. Here's a list of the public holidays:
1. New Year's Day (January 1st): Employees who work on New Year's Day are entitled to time and a half pay and a day in lieu.
2. Day after New Year's Day (January 2nd): This applies only if January 1st falls on a Saturday or Sunday. In this case, employees who work on the 2nd are entitled to time and a half and a day in lieu.
3. Waitangi Day (February 6th): All employees who work on Waitangi Day are entitled to time and a half pay and a day in lieu.
4. Good Friday: (The Friday before Easter Sunday): The date varies each year. Employees who work on Good Friday are entitled to time and a half pay and a day in lieu.
5. Easter Monday (The day after Easter Sunday): The date varies each year, but employees who work on Easter Monday are entitled to time and a half pay and a day in lieu.
6. Anzac Day (April 25th): Working on Anzac Day entitles employees to time and a half pay and a day in lieu.
7. King's Birthday (First Monday after the first Sunday in June): Unless otherwise announced, employees who work on King's Birthday are entitled to time and a half pay and a day in lieu.
8. Matariki: The date varies each year. Employees who work on Matariki are entitled to time and a half pay.
9. Labour Day (Fourth Monday in October): Working on Labour Day entitles employees to time and a half pay and a day in lieu.
10. Christmas Day (December 25th): All employees who work on Christmas Day are entitled to time and a half pay and a day in lieu.
11. Boxing Day (December 26th): Working on Boxing Day entitles employees to time and a half pay and a day in lieu.
12. Anniversary Day (Specific to each region): Each region in New Zealand celebrates its own Anniversary Day, usually falling on a weekend. However, if your region's Anniversary Day falls on a weekday and you are required to work, you are entitled to time and a half pay and a day in lieu.
How is time and a half negotiated?
As an employer in New Zealand, understanding your options and responsibilities regarding fair pay is crucial. While the Federal Government's Fair Pay Agreements (FPAs) system is no longer in place, you still have several ways to ensure your employees feel valued and adequately compensated.
Negotiation pathways
Individual agreements: Open communication and direct negotiation with your employees remain vital. Discussing their desired pay and conditions can lead to mutually beneficial individual employment agreements.
Collective bargaining: Engaging with established unions representing your workforce allows for structured negotiations for a collective agreement covering multiple employees.
Employee representatives: Even without formalised unions, employees can choose representatives to negotiate a collective agreement on their behalf.
Beyond agreements
Sector benchmarks: Researching wage trends and standards within your industry can help benchmark your compensation packages and ensure competitiveness.
Internal reviews: Regularly evaluating your own pay structures and conducting internal fairness audits can reveal imbalances or potential grievances.
Minimum wage adherence: Always ensure your pay rates meet or exceed the current national minimum wage.
Get trusted HR and WHS advice for your business today
Employsure is committed to simplifying the complexities of employment relations for New Zealand businesses like yours, including time and a half. Our experts are here to provide guidance and support, ensuring your workplace remains safe, fair and compliant. Speak to our team today about how we can help.
Frequently Asked Questions
Is Father’s or Mother’s Day time and a half?
No, these days do not typically qualify for time and a half. Time and a half generally apply to public holidays and specific conditions outlined in employment agreements.
Is Black Friday time and a half?
Black Friday, being a regular working day, does not warrant time and a half. However, individual employment agreements may include special provisions for certain days.
Is Halloween time and a half?
No, Halloween is not considered a public holiday in New Zealand, and therefore, employees are not automatically entitled to time and a half pay for working on this day. However, some companies might have internal policies offering premium pay or bonuses for working on days like Halloween, especially if it involves late-night events or extended operating hours.
Are any employees exempt from time and a half?
There are a few categories of exempt employees who may have different arrangements, including high-salaried employees whose contracts include compensation for potential overtime, independent contractors who are not considered employees and don’t qualify for time and a half, highly specialised roles in specific industries might have alternative overtime arrangements, and volunteers.
How does time and a half impact salaried employees?
Salary employees may receive time and a half under specific conditions outlined in their employment agreements.
Can seasonal employees qualify for time and a half?
Seasonal employees may be eligible for time and a half based on the nature of their employment and the specific terms in their contracts.
