Public Holiday Pay: Paid Days Off, Premium Pay and Time in Lieu

Every payroll team eventually fields the same set of questions after a public holiday. I worked on the holiday, so what do I get? I was on leave that week, so do I lose a day? I only work Mondays and the holiday was a Monday, so is that fair? The answers depend on where the person works and what their contract says, but the building blocks are similar almost everywhere.

This article is a general overview of the common models, not advice for any particular country. Public holiday pay is often set by employment law, collective agreements, sector awards or individual contracts, and these change. Always check the local rules and the relevant contract before applying anything here.

Model one: the paid day off

The simplest model is that a public holiday is a day off on normal pay. An employee who would normally have worked that day is not required to, and their pay for the week or month is unchanged.

Even this simple idea has variations:

• Who qualifies. Some systems require a minimum period of service, or that the employee worked the days immediately before and after the holiday.
• What "normal pay" means. For people on fixed salaries this is usually straightforward. For hourly, shift or commission-based staff, local rules may define an average over a reference period.
• Whether the holiday is a separate entitlement. In some countries public holidays sit on top of annual leave. In others, such as the United Kingdom, there is no separate statutory right to paid bank holidays; the statutory annual leave minimum can include them, and whether bank holidays are extra depends on the contract.

Model two: premium pay for working the holiday

When someone works on a public holiday, many systems pay a higher rate. The multiplier varies widely by country, sector and agreement. Some pay a fixed uplift, some pay double, and some pay the premium only in certain industries or under collective agreements.

A worked example

Take an hourly employee on a base rate of 20 an hour (in any currency) who works an eight-hour shift on a public holiday, under a contract that pays one and a half times the base rate for holiday hours. These figures are illustrative.

• Normal pay for the shift: 8 x 20 = 160.
• Holiday premium rate: 20 x 1.5 = 30 an hour.
• Pay for the holiday shift: 8 x 30 = 240.
• Extra cost to the employer compared with a normal day: 240 - 160 = 80.

If the same contract also gives a paid day off for the holiday, the employee might receive the paid day as well as premium pay for hours worked. That combination is common in some places and not in others, which is exactly why the contract matters.

Model three: time in lieu

Instead of, or as well as, premium pay, an employee who works a holiday may be given a replacement day off. This is often called time in lieu, a day in lieu or a substitute day.

Time in lieu is popular with teams that need holiday cover but want to keep costs predictable. It brings its own administration:

• Track accrued days carefully, with the date of the holiday worked.
• Agree how long the replacement day can be held before it must be used.
• Decide what happens to unused days when someone leaves, and check whether local rules require a payout.

Comparing the three models for one person

The figures use the illustrative 20-an-hour, eight-hour example above. Which rows are possible, required or forbidden depends on the jurisdiction and the contract.

Holidays that fall on a weekend or a non-working day

When a holiday falls on a Saturday or Sunday, some countries move the day off to a weekday, some do not, and some leave it to employers. In England and Wales, a bank holiday that lands on a weekend usually has a substitute weekday; in Germany, a holiday that falls on a Sunday is generally not moved. The United States federal calendar observes a Saturday holiday on the preceding Friday and a Sunday holiday on the following Monday, though private employers set their own policies.

Part-time staff raise a related question. If someone works only Monday to Wednesday, a run of Monday holidays affects them more than a colleague who works Thursday and Friday. Some employers handle this by giving part-time staff a pro-rata allowance of public holiday hours rather than "whatever holidays land on your days". Whether that is required, allowed or expected is a local question.

Country-level differences worth knowing

A few broad patterns illustrate how much the rules differ:

• In Canada, holiday pay rules are mainly set by the provinces and territories, with federally regulated employers under federal rules. The list of statutory holidays and the pay formula vary between them. See public holidays in Canada for the dates.
• In Australia, the national employment standards include public holidays, while the holidays themselves are declared by states and territories, and awards or agreements often set penalty rates for working them.
• In the United States, there is no general federal requirement for private employers to give paid holidays or premium pay for holiday work; it is a matter of company policy and contract, with some exceptions.

Treat these as signposts, not rules. Check the official source and a qualified adviser for anything you rely on.

Getting the calendar right before payroll runs

Many holiday pay errors start with the calendar, not the pay rule: using a national calendar for a worker in a region with an extra holiday, missing a newly announced one-off holiday, or forgetting a substitute day. Before each pay period, confirm which holidays fall in it for each location. The business days calculator will list working days and holidays for a date range, and our methodology page explains how dates are sourced.

What to check before the next holiday

1. Confirm which public holidays fall in the pay period for every work location, including regional ones.
2. For each group of staff, find the contract or agreement clause that covers holiday pay.
3. Note who qualifies for a paid day off and how normal pay is defined for variable earners.
4. Agree in writing what working the holiday earns: premium, time in lieu, or both.
5. Record time in lieu with dates and an expiry rule.
6. Check local rules for weekend holidays and part-time staff before assuming a policy.