Table of contents
About this guide
This guide teaches you how to correctly provide for, apportion, and pay annual leave for New Zealand employees.
Annual holidays: The basics
In New Zealand, there are three steps to providing an employee’s entitlements and payments for annual holidays:
Step 1: Provision of the entitlement
Under s16 of the New Zealand Holidays Act 2003 (hereafter known as 'the Act'), all employees must get at least four weeks’ paid annual leave after each 12 months of continuous employment. Under s17 of the Act, an employer and employee may agree on how the employee’s entitlement to 4 weeks of annual leave is to be met based on what genuinely constitutes a working week for the employee.
Step 2: Agreeing the portion of entitlement used when annual leave is taken
Under s21 of the Act, in order to determine the payment for annual leave, the portion of the annual leave entitlement taken must first be agreed. This is based on the employee’s work pattern at the time the leave is taken.
Step 3: Payment for annual leave taken
The agreed portion of the annual leave entitlement taken is paid at the greater of an employee’s ordinary weekly pay (OWP) and average weekly earnings (AWE). When employees work regular hours and days each week for regular pay, working out payment is usually straightforward. When they do not, other calculation methods are used.