For holiday pay calculations in the tourism industry, commission payments are ‘earned’ when the activity is booked, not when the customer pays, the Court of Appeal ruled in a test case over commissions earned by Tourism Holdings’ Kiwi Experience bus drivers.
Holiday pay calculations are notoriously complicated in the tourism industry. Many staff are part-time casuals. Work hours are uneven and irregular. Base pay is often supplemented with commissions generated selling extras added to the basic tourism package.
The Court of Appeal was told Tourism Holdings’ Kiwi Experience bus tours operated on a ‘hop on/hop off’ basis. Having booked a bus tour, tourists could stop and restart from various tourist spots en route. Drivers touted local tourist activities at various venues, taking bookings for the likes of marae visits, hangi, helicopter flights and guided hikes. Tourists paid only when they turned up at the booked activity. Later, payments received were reconciled against individual driver’s booking schedule and commission paid to the driver; ten per cent of the payment if it was a Tourism Holdings activity, 25 per cent of the payment if it was a third-party provider.
Kiwi Experience drivers did not work an ‘ordinary week.’ Tourism Holdings disputed Labour Inspectors calculation of driver holiday pay. They said the alternative Holidays Act formula for non-standard working hours required commissions earned in the weeks prior to a holiday to be included as representative of ‘average weekly earnings’. Tourism Holdings said this interpretation allowed drivers to manipulate their holiday pay by taking annual leave straight after a long bus tour which generated substantial extra commissions.
Commission payments are a regular part of drivers’ pay, the Court of Appeal ruled. Payments are ‘earned’ when activities are booked, even if not paid until after subsequent reconciliation, and are to be included in calculation of ‘average weekly earnings.’
Business, Innovation & Employment v. Tourism Holdings Ltd – Court of Appeal (18.01.21)
21.024