Comply with the law to stay out of hot water Heading into the seasonal…
You will have seen media reports on the increase in family violence during these worrying times we live in. So it is important for payroll to be ready to assist in supporting an employee when they have applied, and been approved, to receive family violence leave (FVL) under the Holidays Act.
The most important thing payroll can do to support employees facing this situation is to get it right. There a couple of areas that don’t involve payroll: asking for proof from the employee (if the business does); approving or not approving FVL; and what needs to go on a payslip. All of these are up to the business/employer to decide: it is payroll’s job to act on instruction provided.
Reasons why payroll should be involved in FVL:
- Payroll needs to confirm the employee’s eligibility to get family violence leave under the Holidays Act, or if they have already had it approved what is the balance of days available to the employee and when a further entitlement can be provided.
- Payroll has to calculate this type of leave by either Relevant Daily Pay (RDP) or if the day cannot be determined Average Daily Pay (ADP) as required by the Holidays Act.
- FVL is part of the Holiday and Leave record, an official record that must be kept for 6 years.
- Payroll needs to understand the rules and advise management or HR of what can and cannot be done with FVL as there are aspects to this leave type that are payroll focussed and need payroll involvement in how it would be applied.
Now to get it straight PAYROLL does not need to know what happened to the employee who is affected by family violence as this is nothing to do with them. Everything in payroll is confidential, be it sick leave, child support, court fines, tax rates; family violence is just one of many confidential issues that payroll professionals deal with every day.
What are the requirements to be eligible for FVL entitlement?
For an employee to be eligible for FVL entitlement it is exactly the same criteria used for both sick and bereavement leave but it is stated in a different section of the Holidays Act (section 72D).
- Criteria being 6 months current continuous employment or over a period of 6 months, at least an average of 10 hours during the period and not less than 1 hour every week or not less than 40 hours in every month.
The employee once they meet the above criteria will get 10 days of FVL. So, at 6 months the employee gets 10 days, and 12 months after that they would be eligible for another 10 days. What makes FVL different from the other types of entitlement provided under the Holidays Act is it is a use-it or lose-it entitlement – if an employee gets FVL and let’s say only uses 8 of the 10 days, when they reach their next entitlement date, the 2 days not yet used does not get carried forward to the next entitlement period.
How is FVL calculated?
The default position is to use RDP which is what the employee would have been paid had they worked on the day concerned (section 9). So, if the employee’s day can be defined RDP must be used. If the day for the employee cannot be determined, then ADP can be used which is the 52-weeks prior divided by the number of whole or part days during which the employee earned those gross earnings, including any day on which the employee was on a paid holiday or paid leave.
What is recorded in the Holidays and Leave record for FVL?
Under section 81 of the Holidays Act the following information must be recorded for FVL:
(g) the dates on which any annual holiday, sick leave, bereavement leave, or family violence leave has been taken:
(h) the amount of payment for any annual holiday, sick leave, bereavement leave, or family violence leave that has been taken
What else does payroll need to know on FVL?
There is a unique situation under FVL involving ACC. In payroll if an employee has a work place accident the first week is paid by the employer at 80%. If the employer does not top up, the employee can ask for a day of sick leave to top up the 80%. This is also the same for a non-work injury from the second week when ACC pays 80%.
If an employee was for example injured in the workplace or a non-workplace as part of a family violence situation and was then unable to work from their injuries and this was assessed and coverage provided by ACC, it means the employee can use FVL to top up the 80% paid by ACC. It’s important that FVL can only be used for a family violence situation and not FVL for just a workplace or non-workplace injury (which should be sick leave). But FVL or even sick leave could be used to top up a family violence situation on top of the 80% being paid by ACC.
So, in conclusion payroll does not need to know what happened for an employee to get FVL but payroll acts to support the employee through being professional in how FVL is provided to the employee (eligibility for entitlement), how it is calculated as per the act (RDP or if the day cannot be determined then ADP), how it is recorded and how it can be used in the situation when ACC compensation is being paid.