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On public holidays, your business is allowed to charge extra for its products or services. Employers may do this to cover the extra wages their employees get for working a shift on a public holiday. However, when you use a surcharge of this nature, you need to be clear and transparent about the charge. 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. Therefore, this article will provide three legal tips to avoid misleading your customers when you charge extra on public holidays.

1. Charge on the Right Day

You can charge extra on a public holiday when you have a justifiable reason to. Something needs to increase your costs enough to justify raising the price of your goods or services to cover said costs.

If your employees work their usual shift on a day that a public holiday falls on, you need to pay them time-and-a-half. This results in extra costs for your business, so you can justify a surcharge to 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 the 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 on these days, you are misleading them. You need to ensure you only have a surcharge on official public holidays.

2. Watch Out for ‘Mondayisation’

Furthermore, there can also be confusion around public holidays that are ‘mondayised’. This refers to public holidays attached to a calendar date that falls on a weekend, making Monday the official public holiday. This applies to:

  • New Year’s Day (1 January);
  • the day after New Year’s Day (2 January);
  • Waitangi Day (6 February);
  • ANZAC Day (25 April);
  • Christmas Day (25 December); and
  • Boxing Day (26 December).

For example, this year, Waitangi Day was on a Saturday, so the official public holiday happened on Monday instead.

Your employees still get time-and-a-half if they typically work one of either of these days, although they do not get it if they usually work both days. This can have extra costs for your business if you employ both weekend and weekday staff. You can still have a surcharge, but as above, only on days where you incur a cost. So, if you have extra costs on Saturday, but not on Monday, you can only charge extra on Saturday.

If you charge extra on days where you had no additional cost, you are misleading your customers, and you could encounter legal penalties. Under the Fair Trading Act, if you mislead your customers, per offence, you could face a:

  • $200,000 fine for individuals; and
  • $600,00 fine for companies.

3. Have Clear Signage

If you charge extra on a public holiday, you need to ensure your customers know this before purchasing your goods or services. You can do this by:

  • displaying signs detailing your surcharge;
  • including a note for customers booking online; 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 is 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 a customer thinks that 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 need to 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 do charge extra, you can only charge enough to cover the additional costs of running.

Key Takeaways

The law lets you charge extra on a public holiday to cover the additional running costs, such as paying your employees time-and-a-half. However, you cannot mislead your customers about the extra charge or fail to tell them about it before they order or pay. If you would like more information or help with avoiding misleading your customers when charging extra on public holidays, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is time-and-a-half?

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

Can I charge extra on public holidays?

You can charge extra on public holidays, but only if you incur extra costs for running on that day. Raised employee wages are extra costs, so you can charge extra if you need to pay more for wages on that day.

Do I need to tell customers there is a surcharge before they pay?

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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