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Businesses Must Be Clear And Upfront About Public Holiday Surcharges

As Waitangi Day approaches the Commerce Commission is reminding businesses that if they choose to add surcharges then they must be clearly disclosed and the reasons for the surcharge accurately described to avoid breaching the Fair Trading Act 1986.

Commission Chair Anna Rawlings said “Businesses can set their own prices for products and services, including charging a surcharge. However, if they do apply a surcharge it must be clearly disclosed, for example, by adding information to their website or placing a sign outside. Customers should be aware that a surcharge will be payable before they make a decision to purchase or engage the service, so they can decide whether to pay the surcharge or go elsewhere”.

“In addition, the reason for any surcharge must be accurately described and must not be capable of misleading consumers,” said Ms Rawlings.

For example, businesses sometimes use surcharges to recover additional costs such as staff wages, because employees get a higher pay rate and an alternative day off under the Holidays Act when they work a public holiday if it’s a usual working day for them. However, if a business says a surcharge covers those additional costs, the surcharge should not exceed those costs, and the costs should actually be incurred by the business.

This year Waitangi Day falls on a Saturday, so the public holiday will be Mondayised and observed on Monday 8 February. Some businesses may face additional costs on Saturday 6 February, others on Monday 8 February and some may face additional costs on both days (for example, if they have some staff who usually work on Saturday and some who usually work on Monday). It is likely to be misleading and a breach of the Fair Trading Act for businesses to charge a public holiday surcharge on days when they do not actually incur additional costs.

Several public holidays will be Mondayised in New Zealand in 2021 with Waitangi Day and Anzac Day both falling on weekends for the first time since the Holidays Act 2003 was amended in 2014. Working out which day is a public holiday can be confusing, which is why the Commission is reminding businesses that they must be upfront about surcharges and check that they are applying them on the right days.

In 2021 Waitangi Day falls on Saturday 6 February, so for people who don’t ordinarily work on that day the public holiday is observed on Monday 8 February. Similarly, Anzac Day falls on Sunday 25 April, so the public holiday is observed on Monday 26 April. And, Christmas and Boxing Day fall on Saturday 25 and Sunday 26 December, so the public holidays are observed on Monday 27 and Tuesday 28 December.

Consumers who consider they have been misled about the reason for a surcharge, or the amount of a surcharge, or who believe that the surcharge has not been adequately disclosed, can make a complaint to the Commerce Commission.

 

Background

Breach of the Fair Trading Act
Only the Courts can decide if there has been a breach of the Fair Trading Act and can impose penalties where it finds the law has been broken. A company that breaches the Fair Trading Act can be fined up to $600,000 and an individual up to $200,000 per offence.

New Zealand’s public holidays in 2021
Public holidays and anniversary days can be found on govt.nz.

Mondayisation of public holidays
Information about Mondayisation can be found on employment.govt.nz.

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