Employment Relations Authority – Sick leave – Relevant daily pay – Average daily pay – Transport allowance

At issue was whether the employer, when calculating sick leave, should have included payment of the employees’ daily transport allowance.

The collective agreement between the employer and the union provided for a transport allowance for those that worked at night and/or were called back to work between work periods. The daily allowance was $6.38 in the first year and $6.64 in the second year of the collective agreement. It was payable to employees who lived more than 2 kilometres from the workplace and did not have a vehicle provided by the employer.

The union argued the allowance should have been included in sick leave payments as, if the employee had worked on that day, they would have been paid the allowance. The employer disagreed, claiming that sections 9 (external link) and 9A (external link) of the Holidays Act 2003 did not require allowances to be included in calculations of relevant daily pay and average daily pay. As the employee would not be travelling on the day they took sick leave, the employer considered it should not have to pay the travel allowance.

The Authority found that the employer was required to include the transport allowance when calculating sick leave. In making this determination, the Authority considered:

The collective agreement stipulated that relevant daily pay had “the meaning given to it by the Holidays Act 2003” and included allowances “paid in accordance with the provisions of this collective agreement with the exception of strict reimbursing allowances” (see para 27).
The travel allowance was not a strict reimbursing allowance. The employees were paid the travel allowance whether or not they incurred any expense (see para 36).
The travel allowance was instead a conditional payment, which must be included in the calculation of relevant daily pay (see paras 41, 50).
As the allowance was not a reimbursement, it did not come within the exceptions to gross earnings in s 14 (external link) of the Holidays Act 2003. Therefore, it must also be included in the calculation of average daily pay (see para 55).

Rail and Maritime Transport Union Inc v KiwiRail Ltd [2023] NZERA 17 [PDF, 270KB]