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 their employer to take paid annual holidays in advance of becoming entitled to them and 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.

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 advance payment of holiday pay from their final pay.

Holiday Pay in Regular Annual Closedown period

An employer can choose to have an Annual 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.

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).

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;

• 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.

For all employees whose work is subject to a regular annual closedown, the employer can nominate a date that will be treated as the date that the closedown begins, and on which the employees become entitled to annual holidays. This date must be reasonably connected to the timing of the regular annual closedown. For example, where there is a Christmas closedown, the date could be set at 15 December to ensure that it always comes before the annual closedown commences.

Other than in this situation, an employer cannot nominate a particular date for annual holiday entitlement calculations.

An employer who wants to implement more than one closedown in any year can if their employees agree, but can’t make them take annual holidays using the above provisions. The date of entitlement to annual holiday is not adjusted by a second closedown.