Both Federal and State Public Holidays are added to Xero Payroll Settings. The purpose of Public Holidays in Xero is to ensure that when an Employee submits a Leave Request any Public Holidays are excluded from the leave period. 

Fixed Public Holidays are added to Xero Payroll up to two years in advance, based on the updates on the official information available for each State. If a leave application is submitted in the future, before the Xero Payroll team adds the public holiday, then the hours calculated in the leave application will need to be manually adjusted. 

Add another Public Holiday to Xero Settings

Although Xero automatically adds all official Federal and State's Public Holidays, your Business may decide to add additional holidays, it may be for religious purposes, or a specific Industry Holiday (i.e. Picnic day in the Plumbing Industry).

1. From the Organisation Menu go to Settings > Payroll Settings
2. Select the [Holidays] Tab
   
   è  The Set up your holidays screen opens
   
   
   
   
3. Click on [Add Holiday]
   
   è  The Add Holiday pop-up screen opens
   
   
   
   
4. Select/Enter the following information:
   • Name > Type or select the name of the Public Holiday
   • Date > Select the date of the Public Holiday
   • Add to Group > Select one or more States
5. Click on [Add]

Set-Up & Manage Public Holidays (Not Worked)

Assign the Public Holiday Group to an Employee

For a Public Holiday to be automatically adjusted in an Employee's payslip, the correct Holiday Group must be assigned to the Employee's contact.

1. Go to Payroll > Employees
2. Open the Employee contact and select the [Employment] Tab
   
   è  The Add an Earnings Line screen opens
   
   
   
   
3. In Holiday Group select the State where the Employee resides
4. Select the option: Include holidays in Payslips
   Note: When this option is selected, the Public Holidays will automatically be added to this employee's payslip as separate earnings lines.
5. Click on [Save]
   

Public Holidays deducted from Leave Applications

When an Employee submits a Leave Application, Xero will deduct any Public Holiday from the leave period (i.e. an employee takes a week on Annual Leave that included one day of Public Holiday, Xero deducts 4 days of Annual Leave).

When processing a Leave Application, the Public Holidays full-time are automatically deducted as full-time days (7.6). If a Business' workdays are not all made up of the same hours, or when dealing with Part-Time Employees, then the hours deducted automatically for the Public Holiday should be adjusted manually. We highly recommend that the Admin person or Bookkeeper processes these types of leave applications, rather than request the Employee to submit them. 

1. Go to Payroll > Employees
2. Open the Employee details and click on the [Leave] Tab
   
   è  The Employee's Leave Tab
   
   
   
   
3. Click on [New Leave Request]
   
   è  The New Leave Request screen opens
   
   
   
   
4. Select/Enter the following details:
   • Type of request > Select: Annual Leave
   • Description > Type: the reason for the leave (i.e. Christmas Shut-down)
   • Start and End Date > Type the leave from and to dates
   • Hours > Make sure the total hours of leave calculated by Xero are correct
     Note: in this example, 3 Public Holidays are included in this period: Christmas Day, Boxing Day and New Year's Day. For Full-Time Employees, Xero will reduce (7.6*3 =) 22.8 hours automatically (providing that in your workplace each workday is made up of 7.6 hours). You will need to manually amend those hours if your workdays are made out of different hours and for Part-Time Employees.
5. Click on [Approve]

Public Holiday Pays

When a Pay Run includes Public Holidays, Xero will display each Public Holiday as a separate Earning line. Xero will calculate the number of hours to pay for the Public Holiday by looking at the hours set in the Employee Pay Template divided by 5 Days. 

If the Public Holiday falls on a Weekday, it will assign the Employee standard pay rate from the Pay Template. However, if the Public Holiday falls on a Weekend, the working hours will default to 0. 

When a Public Holiday falls on a weekend, the following weekday (Monday or Tuesday) may be deemed as a Public Holiday either as an additional day or as a substitutional day. This varies from State to State and from one Public Holiday to another. More information on Public Holidays is available on our website.

If an Employee Pay Template does not include any default hours, then Xero will default 0 hours next to each Public Holiday Earning line. 

1. Public Holidays are automatically itemised in separate lines in an employee's pay run
   
   è  The Employee's Pay screen
   
    
   

Missing Public Holidays in a Pay Run

If a posted pay run is missing a public holiday, you can adjust the Employee's Ordinary Hours by processing an unscheduled pay run.

If the current pay run hasn't been paid yet, you can revert it as a Draft and reset the affected payslips, or the whole pay.

Paying Public Holidays tracked through Timesheets

If a Business has a workforce with a number of Part-Time Employees all working different hours each day of the week. A more efficient way to track the Public Holiday is by not enabling the option: Include holidays in payslip in the Employee Contact's [Employment] Tab and create a separate Public Holiday Pay Item that can be used to track Public Holidays in the Employees' Timesheets.

1. From the Organisation Menu go to Settings > Payroll Settings
2. Click on the [Pay Items] > [Earnings] Tab
3. Click on [Add] > Ordinary Time Earnings
4. Select/Enter the following details:
   • Earnings Name > Type: Public Holiday
   • Display Name > Type: Public Holiday
   • Rate Type > Select: Multiple of employee's ordinary earning rate
   • Multiple > Type: 1
   • Account > Select: Employees -Wages & Salaries (460)
   • Exempt from PAYG Withholding > Leave Blank
   • Exempt from Superannuation... > Leave Blank
   • Reportable as W1... > Select this option 
   • Accrue Leave on this earning rate > Select this option
5. Click on [Add]
   
   è  The Pay Item screen
   
   

In this example, Henry is a Part-Time worker who works different hours each day (Mon and Wed 5 Hours, Tue 4 hours, Thu 6 hours and has Friday off). In the timesheet below he is paid 5 hours for Wed 26th January 2022 (Australian Day) in a separate Public Holiday Timesheet line. 

è  The Public Holiday tracked through timesheets

Set Up Public Holidays Worked

Employees who work during Public Holidays are generally entitled to a penalty rate, this varies depending on the Employee's classified Award. In the following example, we will create a Public Holiday penalty rate paid 2.5 times.

1. From the Organisation Menu go to Settings > Payroll Settings
2. Click on the [Pay Items] > [Earnings] Tab
3. Click on [Add] > Ordinary Time Earnings
4. Select/Enter the following details:
   • Earnings Name > Type: Public Holiday Worked 2.5x
   • Display Name > Type: Public Holiday Worked 2.5x
   • Rate Type > Select: Multiple of employee's ordinary earning rate
   • Multiple > Type: 2.5
   • Account > Select: Employees -Wages & Salaries (460)
   • Exempt from PAYG Withholding > Leave Blank
   • Exempt from Superannuation... > Leave Blank
   • Reportable as W1... > Select this option 
   • Accrue Leave on this earning rate > Select this option
5. Click on [Add]
   
   è  The Pay Item screen