Your business can charge extra for its products or services on public holidays. You may do this to cover the extra wages your employees earn for working a shift on a public holiday. However, you need to be clear and transparent about the charge when you use a surcharge of this nature. You also need to have a justifiable reason for doing so, which you cannot mislead your customers about. Otherwise, you run the risk of facing legal penalties under the Fair Trading Act and other laws that protect consumer rights. This article will take you through what a public holiday is and three tips to avoid misleading your customers when you charge extra on public holidays.
What is a Public Holiday?
Firstly, it is important to understand what a public holiday is. There are currently 11 recognised public holidays in New Zealand each year. These public holidays are recognised in the Holidays Act 2003. These public holidays are:
- New Year’s Day;
- Day after New Year’s Day;
- Waitangi Day;
- Good Friday;
- Easter Monday;
- Anzac Day;
- King’s Birthday;
- Matariki;
- Labour Day;
- Christmas Day; and
- Boxing Day.
When a public holiday falls on a day an employee would typically work, they are entitled to the day off. However, an employee may be made to work if:
- the public holiday is observed on a day the employee would typically work; and
- their employment agreement requires them to work.
Where an employee is made to work, there is a public holiday pay rate. This is ‘time-and-a-half’. Further, the employee will also be entitled to a day off in lieu, a paid day off that they can take at a later date. If an employee works a public holiday which is not a usual day they would work, they are entitled to time-and-a-half pay.
Employee entitlements for public holiday work can make it confusing to understand when you can charge customers extra.
Charge on the Right Day
You can charge extra on a public holiday when you have a justifiable reason to do so. Your reason will be justified if your costs increase enough to warrant increasing the price of your goods or services. As mentioned above, you need to pay your employees time-and-a-half if they work their usual shift on a day that a public holiday falls.
This results in extra costs for your business, so you can justify a surcharge on the days this extra wage payment applies. However, you can only charge extra for this reason on a public holiday. You cannot use raised employee wages as an excuse for a temporary surcharge unless you actually incur that cost. This can become confusing when public holidays fall across multiple days, which means that you may charge your customers on a wrong day.
For example, Easter weekend is a holiday period that lasts for four days. Despite this, only Good Friday and Easter Monday are official public holidays. Therefore, these are the days you have to pay your employees time-and-a-half, so these are the days you can charge extra. You do not incur these costs on Easter Saturday or Sunday, as these are not official public holidays. If you charge your customers extra for Easter Saturday or Sunday, you mislead them. You need to ensure you only have a surcharge on official public holidays.
Continue reading this article below the formWatch Out for ‘Mondayisation’
There can also be confusion around public holidays that are ‘mondayised’. This refers to public holidays that fall on a weekend, where the official public holiday is observed on a Monday.
Your employees still earn time-and-a-half if they ordinarily work one of either of these days. However, they do not get time-and-a-half if they ordinarily work both days. This can incur extra costs for your business if you employ both weekend and weekday staff. You may still implement a surcharge, although again, this can only be implemented on days where you incur extra costs.
If you charge customers more on days where you had no additional cost, you are misleading them. This may result in penalties. Under the Fair Trading Act, if you mislead your customers, per offence, you could face a fine of up to:
- $200,000 for individuals; or
- $600,00 for companies.
Have Clear Signage
If you charge extra on a public holiday, you must ensure your customers know this before purchasing your goods or services. You can do this by:
- displaying signs detailing your surcharge;
- adding a message to your website; and
- telling customers at the time of purchase or before they order.
Customers have a right to know about the full cost of your goods or services. This allows them to decide whether they want to do business with you or go somewhere else. You should advertise any surcharge in a prominent place so that there is no misunderstanding. If customers think you misled them because you did not tell them about a surcharge, they can complain to the Commerce Commission.
For example, if you run a restaurant, you must tell your customers about a surcharge before ordering. You also need to be honest about your reasons for a temporary surcharge. If you are charging extra to cover the costs of running on a public holiday, you need to tell your customers this. When you charge extra, you can only charge enough to cover the additional costs of running your business on this day.
To protect your business, ensure supplier contracts meet your business’ needs. Our free Commercial Contracts Checklist will help.
Key Takeaways
Your business can charge extra for its products or services on public holidays. You may do this to cover the extra wages your employees earn for working a shift on a public holiday. However, you must avoid misleading your customers when doing so. Some key tips for avoiding misleading your customers include:
- ensure you charge on the right day;
- watch out for ‘Mondayisation’; and
- have clear signage.
If you need assistance avoiding misleading your customers when charging more on public holidays, our experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.
Frequently Asked Questions
If your employees work on a public holiday that falls on a day they normally have a shift, then the law entitles them to receive time-and-a-half. This means you need to pay them at least 1.5 times the hours they worked that day.
You must take reasonable steps to ensure customers know there is a surcharge before they order or pay. Otherwise, you are misleading them about the terms of the sale. You should have signs about the surcharge and a notice on your website if customers place bookings online.
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