Annual Leave: Leave it at your own peril

From time to time businesses of varying sizes and across different industries are made examples of by the media in relation to inaccuracies found in methodology used to calculate various staff leave types. Accuracy, and to some degree awareness, of leave types, how they are measured and ultimately how they are applied, can, in reality, be a proverbial “minefield” driven by complex legislation and a multitude of differing views and interpretations.

What we all know to be true in the Dairy Industry is that Part-Time and Full-Time employees, whether they be salaried or waged, are entitled to Annual Leave, Sick Leave and Alternate Days. Salaried staff are entitled to Rostered Days off as well. Methods as to how these various leave types are applied in relation to salaried staff is explained in some detail below.

Annual Leave:

The Roster agreed to by both Employer and Employee is required in order to measure the number of days AL an individual is entitled to for any given season. It is important that the total number of days of AL days accrued over a season should reflect the daily accrual rate giving real-time accuracy and transparency. A selection of rosters with corresponding values of AL days are given as examples below:

12:2 all season

24.017 AL days per season

Accrued at 0.0658 days/ day

52 RDO’s per season

11:3 with 6:1 for 8 weeks

22.338 AL days per season

Accrued at 0.0612 days/ day

74 RDO’s per season

8:2, 8:3 with 6:1 for 8 weeks

21.8635 AL days per season

Accrued at 0.0599 days/ day

80 RDO’s per season

7:2, 7:2, 7:3 all season

21.024 days of AL days per season

Accrued at 0.0576 days/ day

91 RDO’s per season

It is vitally important that the roster in the employment agreement is used as the yardstick to measure AL accrual. Theoretically the roster may change due to nuances on the farm but the employment agreement and the datum numbers used within are what drive the entitlements for AL and RDO’s, so any variations must be measured and accounted for in fairness to the employees.

Rostered Days Off:

An added bonus of a system that accurately accrues AL based on the agreed roster is that system will accurately determine the number of RDO’s for a season which can then be measured accurately. (RDO’s are an entitlement and therefore should be measured)

Sick Leave:

New employees are entitled to 5 days of SL after 6 months of employment and then another 5 days per 12-month period from the date that they are entitled to their initial SL.

Example: Bobs’ start date of employment is July 7, 2016.

He is entitled to 5 days of SL January 7, 2017

He is entitled to a further 5 days of SL on January 7, 2018

In total Bob can accumulate up to a minimum of 20 days of SL unless more have been agreed to.

Alternate days:

When a salaried individual works on a public holiday they are entitled to time and a half for the hours they work plus an alternate day. The time and a half is the tricky part to figure out for the salaried employee as the measure is calculated based on an hourly rate. To ascertain an hourly rate, daily contracted hours of work (DCH) need to be established:

DCH (Same number is used over the entire season and must be well referenced in the Employment Agreement -This is a datum)

For the purposes of the examples below DCH = 10

RDO’s based on Roster 7:2, 7:2, 7:3 = 91 RDO’s

365 days – 91 RDO’s = 274 days

274 days ÷ 52 weeks = 5.27 days worked / week

Salary (TPV) of $61,000 ÷ 52 weeks = $1173.07/ week ÷ 5.27 days worked per week = $222.59/ day (Daily Rate of Pay) ÷ 10 hours (DCH) = $22.26/ hour.

We have determined an hourly rate for the salary based on 2 datums: The RDO’s and Daily Contracted Hours (DCH)

When a salaried employee works on a Statutory Holiday the pay received for that day is governed by the hours they work. DCH, which in this case is a datum of 10 is used in the formula.

Example: Bob works 3 hours on a statutory holiday: 3 x 1.5 = 4.5 hours. Bob is contracted to work 10 hours but can legally be paid for just the 4.5 leaving a shortfall of 5.5 hours at his hourly rate of $22.26 = a reduction in his standard salary of $122.43.

Example 2: Bob works 11 hours on a statutory holiday. 11 x 1.5 = 16.5 hours, his DCH is 10 hours/ day which leaves 6.5 hours x $22.26 = $144.69 will be paid in addition to his normal salary. In both examples, Bob will receive an Alternate day replacing the Statutory day which he worked. This alternate day can be taken at a day mutually agreed by Bob and his employer. If Bob were to leave with a balance of Alternate days owing he would be paid these days as part of his Final Leave calculations.

Wouldn’t it be refreshing to have a system that gave complete clarity to all matters relating to the various leave types!  Agrismart displays in an easy to follow format all leave taken, accrued, entitled, taken, paid out and more, completely removing the guesswork from an area of high importance to your staff. For New Zealand Dairy Farmers there is no other option that comes close.