How to pay public holidays: the scenarios that trip up payroll

Public holidays look simple on the surface. An employee doesn’t work, you pay them their normal day, everyone moves on. Then someone calls in sick on Australia Day, or a public holiday lands in the middle of half-pay leave, and suddenly you’re deep in the award trying to work out what applies.

These are the public holiday questions we get asked most, grouped by scenario. Some have clear answers under the National Employment Standards (NES). Others sit in grey territory, and where they do, we’ve given you our position and the reasoning behind it.

A quick note before we start: always check your award or enterprise agreement first. If it doesn’t specify, the Fair Work Ombudsman publishes the list of public holidays for each state and territory.

The baseline: a public holiday falls on a normal workday

If an employee is ordinarily rostered to work on the day a public holiday falls and they’re not required to work, you pay them at their base rate of pay for the ordinary hours they would have worked.

Base rate means exactly that. It doesn’t include incentive-based payments, bonuses, loadings, monetary allowances, overtime or penalty rates.

The flip side applies too. If the public holiday falls on a day the employee doesn’t normally work, they’re not entitled to any payment for it. A part-timer who never works Mondays doesn’t get paid for a Monday public holiday.

Which state’s public holidays apply?

Employees are entitled to the public holidays observed in the state or territory where they’re based for work, not wherever they happen to be on the day. A Melbourne-based employee working in Sydney on Melbourne Cup day is still entitled to the public holiday, because their job is based in Victoria.

Sickness and public holidays

An employee is rostered on for the public holiday and calls in sick. Process this as a public holiday not worked, paid at their base rate. Don’t deduct from their personal/carer’s leave balance. Under section 98 of the Fair Work Act, an employee can’t be taken to be on personal/carer’s leave on a public holiday.

An employee works part of the public holiday, then goes home sick. Pay public holiday rates for the hours they actually worked, and their base rate for the hours they didn’t. Again, no deduction from their sick leave balance. The unworked portion is treated as a public holiday, not sick leave.

An employee calls in sick on a public holiday they were rostered to work, but it’s not a day they’d normally work. No payment applies. The entitlement only exists where the public holiday falls on a day the employee would ordinarily have worked.

A public holiday falls during paid leave

If an employee is on annual leave or personal/carer’s leave when a public holiday falls, the public holiday isn’t deducted from their leave balance. It’s paid as a public holiday at their base rate, and this includes any hours falling on a part-day public holiday. This comes up every year over the Christmas period, and it works the same way during a directed annual shutdown.

What if they’re on leave at half pay? Public holidays are paid at the employee’s base rate of pay. While an employee is on half-pay leave, their base rate is at half pay, so the public holiday is paid at half pay too.

A public holiday falls during long service leave

Long service leave sits under state and territory legislation rather than the NES, so whether the public holiday is paid on top of LSL depends on where the employee works:

In the states where the answer is yes, the public holiday doesn’t come off the employee’s LSL balance. In the others, the day is simply part of the LSL period.

A public holiday falls during unpaid leave

Unpaid leave on both sides of the public holiday. The public holiday is unpaid, and this includes unpaid parental leave. The employee’s base rate of pay for that period is zero, so there’s nothing to pay.

Unpaid leave on one side only. This one’s a genuine grey area, and you won’t find a clean answer on the Fair Work site. Our advice is to pay the public holiday. The employee’s absence doesn’t span the full period around the holiday, and paying it is the lower-risk position.

Annual leave taken during unpaid parental leave. Here’s a trap: if an employee on unpaid parental leave takes a block of annual leave and a public holiday falls within it, the public holiday isn’t paid. The unpaid parental leave is the operative absence, and the annual leave doesn’t change that.

A public holiday falls on the last day of notice

Yes, you pay it. The public holiday forms part of the employee’s notice period, so they’re entitled to be paid for it like any other day in that period, whether they work the notice out or you pay it out in lieu.

A public holiday falls during a stand-down

Employees stood down without pay under the Fair Work Act are still entitled to be paid for any public holiday that falls during the stand-down period, provided they would normally have had ordinary hours of work on that day. The stand-down suspends work, not the public holiday entitlement.

A public holiday falls while the employee is on workers compensation

This one catches people out because it feels like it should work the same way as paid leave. It doesn’t. Under section 130 of the Fair Work Act, an employee receiving workers compensation isn’t entitled to take or be paid NES leave entitlements, including public holidays, unless the workers compensation law in their state or territory provides otherwise. Currently, none do.

In practice, you don’t process a separate public holiday payment. The employee’s weekly compensation payment simply continues through the holiday. That payment is calculated on their pre-injury average weekly earnings, which already reflects public holidays they would have worked, so the holiday is effectively baked in rather than paid on top.

Two things to check before you treat this as settled for a given employee: the workers compensation scheme in their state, and their award or agreement, since some awards contain accident pay clauses that top up compensation payments.

An employee works the public holiday

Your award will state the rate of pay for a public holiday worked. Check it, because rates vary between awards. Under many awards and enterprise agreements, an employee who works a public holiday may receive a penalty rate or loading for the hours worked, or be given time off in lieu instead of penalty rates.

If your employee is genuinely award-free, anything above their normal pay for the day comes down to negotiation between you and the employee.

One thing you can’t do: change an employee’s roster specifically to avoid paying for a public holiday. If the day would ordinarily have been worked, the entitlement stands.

Super and public holidays

This is where employers most often get caught out, because the answer depends on whether the day was worked and how it’s classified:

• Public holiday not worked: the payment counts as ordinary time earnings (OTE) and attracts super at 12%. The ATO’s ruling on OTE, SGR 2009/2, confirms that pay at the ordinary time rate for public holidays is OTE.
• Public holiday worked as a normal working day: the full pay for the day, including any penalty rates, attracts super.
• Public holiday worked as overtime: super isn’t payable, provided the overtime is genuinely identifiable as hours outside the employee’s ordinary hours under their award or agreement. The ATO’s guidance on qualifying earnings is clear that overtime payments are excluded, but only where ordinary hours are clearly identified.

With Payday Super now in effect, super is calculated on qualifying earnings each payday rather than OTE each quarter, but the treatment of public holidays hasn’t changed. Payments for ordinary hours still attract super, and genuine overtime still doesn’t. The same classification logic applies to any allowances forming part of the day’s pay.

Public holidays and parental leave

Company paid parental leave. This sits above the legislated minimum, so how you treat public holidays during it comes down to your policy. Most organisations don’t extend paid parental leave by public holidays. They pay the set number of weeks and leave it there. Whatever you decide, apply it consistently and put it in writing.

Government Paid Parental Leave. You don’t pay public holidays on top. Your role is to pass on the funds from the government. Super on government PPL is also off your plate: for children born or adopted from 1 July 2025, the ATO pays the Paid Parental Leave Superannuation Contribution directly to the employee’s fund after the financial year ends. You don’t need to calculate or pay it.

Quick reference: is the public holiday paid?

When the answer isn’t in the award

Most public holiday questions have a clear answer once you know where to look. The ones that don’t, like unpaid leave on one side of a holiday, need a considered position and consistent treatment across your workforce.

That’s the value of having payroll specialists in your corner. Through our managed payroll services, we deal with these scenarios every week, across awards and agreements, and we know where the grey areas are before they become problems in your pay run.

If public holiday processing is eating your time or you’re second-guessing your setup, get in touch or request a quote. We’ll make sure every public holiday is paid right, first time.