Leave entitlements

Leave entitlements depend on the nature of your contract and are prescribed by the Holidays Act.

Casual staff:

  • receive an 8% loading on taxable earnings (pay rate may be inclusive of the loading)
  • pay rate cannot be less than minimum hourly rate + 8% (which is why hours worked MUST be recorded, even for piece-workers)
  • payslip must show the casual loading component clearly
  • may be entitled to sick leave (depends on work pattern)
  • entitled to payment for Public Holiday if they would normally have worked that day (and entitled to payment at time+half and a whole alternative day if they do work)

Permanent staff:

  • Annual leave accrues annually (minimum 4 weeks) at the end of each year of service (anniversary)
  • Anniversary can be deferred due to extended leave without pay
  • Annual leave is valued and consumed in weeks: valuation is the best of the average weekly earnings for the last 52 weeks (or since start date), or the employee's ordinary weekly earnings, or an agreed rate (must be the best of all those options, values may change every week)
  • Annual Leave accrued whilst on Parental Leave uses different valuation rules that may significantly affect the value (SmoothPay calculates this for you)
  • The employee's legal annual leave entitlement is the total of leave accrued each anniversary LESS any leave used
  • Termination pay is made up of any current earnings due PLUS the value of any unused annual leave entitlement PLUS 8% of total earnings since last anniversary
  • Sick leave (minimum 5 days, regardless of work pattern) accrues after 6 months service, then annually thereafter and may be capped to a maximum accrual of 20 days
  • Sick, Public, Alternative leave are all valued using RDP (Relevant Daily Pay) rules:
    • If you know what the employee would have earned (e.g. rostered hours or salary) then pay that amount, otherwise
    • pay ADP (average daily pay) calculated from days paid (not days worked) over the last 12 months
  • entitled to payment for Public Holiday if they would normally have worked that day (and entitled to payment at time+half and a whole alternative day if they do work)
  • entitled to payment for a Public Holiday if they would normally have worked but were sick or bereaved (pay them Relevant Daily Pay with no deduction of sick or bereavement leave) 

Staff also have other leave entitlements such as Parental Leave, Bereavement Leave, special leave for jury duty and so on.

Guides for all common leave types and how to process them correctly in SmoothPay are available in our learning centre.

Common errors:

  • it is not correct to accrue, value and consume annual leave in days, hours or dollars unless it can be shown that the results obtained are no less than their minimum entitlement under the Holidays Act and the employee has signed their agreement to that effect (these methods tend to require constant adjustment and more often than not do not fairly reflect the employee's correct entitlements). SmoothPay does not provide helpdesk assistance with non-compliant leave accrual methods.
  • it is not correct to pay staff 8 hours at their normal pay rate for leave unless it exceeds their minimum entitlement per the Act
  • it is not correct to estimate or accrue leave each pay period or month as the employee may have a false expectation of their actual leave entitlement
  • a salary has no special meaning or protection under the Act and salaried staff are entitled to the same minimum entitlements and methods of valuation as any waged employee

See also

Casual staff

Holidays Act online

Calculating leave payments (dol.govt.nz)

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