Holiday Pay - NZ

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Holiday Pay in New Zealand is covered by the Holidays Act 2003

Paying Holiday Pay In Advance

Where Employees Request Holiday Leave In Advance

Employees can ask to take paid annual holidays in advance Employees can ask to take paid annual holidays in advance of becoming entitled to them - either because they haven’t completed 12 months of service, or because they have already taken their entitlement. The employer can choose whether or not to approve annual holidays in advance, unless the employee has a right to take annual holidays in advance in their employment agreement.

The payment for holidays taken in advance is still based on the greater of the employee’s ordinary weekly pay or average weekly earnings. To calculate average weekly earnings where the employee has less than 12 months’ service, the gross earnings from starting work until the last pay period before the holiday are divided by the number of weeks worked.

To calculate average weekly earnings for taking annual holidays in advance where the employee has been employed for more than 12 months use the 12 months prior to the end of the last pay period before the holiday.

If an employer approves annual holidays in advance, they should make sure that the employee has agreed in writing that the employer can deduct any overpayment of holiday pay from their final pay.

Holiday Pay in Regular Annual Closedown period

Calculating an employee’s annual holiday entitlement is different if the employer chooses to have a regular or customary annual closedown. The closedown can occur either:

• across the entire workplace (for example, where a company closes over the Christmas/New Year period), or
• for part of an enterprise (for example, where the factory closes for maintenance while the office, dispatch and sales departments remain open).

The employer can only have this type of closedown once a year and require employees to take annual holidays during the period of the closedown, even where this requires employees to take time off for which they are not fully reimbursed. The employer is required to provide employees with at least 14 days’ advance notice of the closedown.

To determine whether a day that falls during a closedown period would be an ‘otherwise working day’ in regard to entitlements to public holidays, alternative holidays, sick leave and bereavement leave, see the section below on ‘Public holidays during a closedown period’. Employees who have been employed for less than 12 months at the date of closedown will not have worked long enough to be entitled to annual holidays. In this situation the employer must pay the employee 8% of gross earnings since their start of employment less any payment for annual holidays taken in advance. In addition to the payment of the 8%, the employer and employee may agree to the employee taking paid annual holidays in advance of their entitlement (these holidays will be deducted from the next year’s entitlement). The employee’s anniversary date for annual holidays entitlement must move to the date of the start of the closedown (or another date close to the start of the closedown) and they will not be entitled to any annual holidays for another 12 months.