Final Pay processing where employee has a balance of leave accrued whilst on Parental Leave

This is a general guide to how an employee's termination payment(s) should be processed in compliance with current legislation when they have a balance of annual leave accrued whilst on Parental Leave, so as to not over-pay the employee.

  1. Annual Leave that accrues during Parental Leave (including it's shadow period - refer to our Parental Leave guide for full particulars), is accrued, valued and consumed using rules that override the Holidays Act - and thus should be paid separately and prior to a normal termination pay (as the value for any remaining PL-accrued leave could be significantly less than it would otherwise be under the Holidays Act)
  2. Any remaining unused annual leave is paid per the Holidays Act rules (best of: current contract or average over the last 52 weeks or agreed weekly value) - the Final Pay Assistant calculates this for you automatically.
  3. Termination payment of 8% of earnings paid or payable since the employee's last anniversary. The Final Pay Assistant calculates this for you automatically.

Any questions related to interpretation of the various Acts (Holidays Act, Employment Protection Act etc) should be directed in the first instance to the Department of Labour (MBIE)

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