What is The Holidays Act?
The Holidays Act ensures that all employees working in New Zealand are legally covered when it comes to receiving holiday and leave payments. The Holidays Act was established in 2003 and requires that:
- Employers keep accurate for all employees of hours worked during a pay period, the leave accrued, entitled leave, and leave taken
- Employees are entitled to annual leave
- Employees are entitled to sick and bereavement leave
- Employees are entitled to paid leave on public holidays
What is the purpose of The Holidays Act?
The main purpose of the Holidays Act is to promote a balanced lifestyle between work and other aspects of employees lives. The Holidays Act does this by providing and ensuring employees are entitled to a minimum of:
- Annual holidays to allow employees the opportunity to rest, recuperate, and time for recreational activities
- Public holidays of national, cultural, or religious significance
- Sick leave for when employees are unable to attend work due to being sick, or if someone who relies on that employee for care is sick
- Bereavement leave for when employees suffer a bereavement and feel unable to work
- Family violence leave to assist employees suffering from cases of family violence
How are holiday and leave payments calculated in New Zealand?
Calculating holiday and leave payments must be done each time an employee goes on holiday or takes leave. Correctly determining the amount paid to an employee taking annual leave, or for holidays, can be tricky as the rate of payment may change from pay cycle to pay cycle. To add further confusion to this process, annual leave and worked public holidays are paid differently from unworked public holidays, sick, or bereavement leave.
The annual leave payment rate is calculated as the higher of either the employee’s ordinary weekly pay at the beginning of the leave taken, or the employee’s average weekly earnings for the 12 months prior to the leave being taken. Worked public holidays are paid at a rate of at least time and a half. The remaining types of leave such as sick, bereavement, and unworked public holidays are paid at the rate of the average daily pay for the employee.
As you can see, if you’re running your own payroll, correctly calculating employee leave can be difficult and confusing, especially when changes to NZ employment law are introduced. With Employment Hero’s payroll software, this process is streamlined and automated with each pay run.
Our easy-to-use payroll software takes the hassle out of calculating and paying your employees leave, and will ensure your business stays compliant with The Holidays Act.
Need help with your payroll matters?
We understand that annual, sick, and bereavement leave payroll matters can be confusing for business owners in NZ. That is why Employment Hero’s compliant payroll is here to help you streamline holiday pay, so you can feel confident each payroll run.
Book a demo with us to learn more about automating payroll with Employment Hero.
Disclaimer: The information in this article is current as at 30-Oct-2022, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related corporate bodies (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified, and no warranties are given that it is complete, accurate, up-to-date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.
