Spouse in family business awarded over $41,000 for unpaid holidays…

The Employment Court has found that a spouse who did not take holidays is entitled to be paid for those holidays even though the husband and wife had both not taken very many holidays over the 13 years of their marriage.

The couple ran two businesses and for the 13 years of their relationship concentrated on building up those businesses.  They only took short holidays over that time.

Unpaid holiday pay never expires and therefore the spouse who did not take holidays and who brought the claim was able to go back 13 years to the start of their employment. 

The Employment Relations Authority (ERA) had awarded over $59,000 in unpaid holidays, but the Employment Court reduced this to just over $41,000. The Court  found that the spouse had taken some holidays during the 13 years and that some of the work she claimed to have done while on holiday was not actually required to be done by her employer and it was her choice to undertake the work.  That revolved around doing social media posts which could have been paused while they was on holiday for a week.  The Court did find that the answering of phones and emails when she was on holiday was work which interrupted her holiday and was required by the employer, because it knew she was doing these and did nothing to stop those calls being directed to her or to instruct her not to work while she was on holiday.

In relation to working on the social media posts the Court said “an employee who, while on annual holidays, actively chooses to engage in work without it being required of them by their employer (by instruction, or by pressure or expectation), or it being necessitated by the circumstances, cannot then claim to have been denied their entitlement”.  The time therefore spent by the spouse on social media work was not required by her employer and did not reduce the days of holiday taken.

The other aspect which has come back to bite the employer in this case was the rate of pay to be paid.  Holiday pay for untaken holidays is paid at the final level of pay when the employment ends.  This means that all of the holidays for the 13 years were all calculated at the rate of pay paid to the spouse at the end of the 13 year employment, despite lower pay rates over preceding years.

The case illustrates that it is important to require all employees to take their annual leave every year and not to allow it to build up. It can create a large debt which is all paid at the final rate of pay, rather than the rate of pay which applied at the time they should have taken their holidays.

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