---

Note: Annual Holiday Pay Day can be different to a Day of Sick Leave (or Bereavement Leave, or Alternative Holiday, or Public Holiday Day Off) in some cases.

The information on this page relates to leave other than Annual Holiday Pay, but a note on how a day of annual holiday pay could be a different value than a day of sick leave (or one of the other leave types) is given here first.

When an employee works 5 days per week, 8 hours per day, and does not work any overtime or receive any other pay, then a day of sick leave or a day of annual holiday pay and so on will be the same value.

The difference can occur in the cases where the average earnings over the previous 52 weeks (or sometimes 4 weeks) are required due to difficulties in determining an employees usual weekly or daily pay. This may happen where it is just not possible to determine an employees rate for a day off due to their irregular hours.

The values could also be different for an employee who regularly works different hours on different days. For example, employee works 8 hours per day on Monday to Wednesday, but 6 hours per day on Thursday and Friday.

Annual Holiday Pay is defined under the Holidays Act as being based around ordinary WEEKLY earnings and average WEEKLY earnings. But Sick Leave, Bereavement Leave and the other leave types are defined as being based around the employees DAILY pay.

Annual Holiday Pay is generally paid at the greater of the employees ordinary WEEKLY earnings or average WEEKLY earnings over the past 52 weeks. This is then divided by the number of days defined as a week for holiday pay in the employees contract. When the ordinary weekly earnings cannot be determined, the Holidays Act says that this should be estimated from the average earnings over the previous 4 weeks, and then this 4 weekly average compared with the 52 week average to determine the greater value which is then paid to the employee. (Payroll Pro works these out for you and shows you the greater value so in usual circumstances you can just choose what Payroll Pro has selected).

Sick Leave etc for an employee whose daily rate cannot be determined is calculated as the average DAILY earnings over the past 52 weeks - this can give a different value to that calculated for a day of Annual Holiday Pay which uses the WEEKLY earnings.

 

Here is an example:
Note that this is only an example so even with similar employees your contracts may specify some differences to those shown in the example.

This employees employment contract states they are entitled to 4 weeks annual holidays per year, and that a week of holidays is to be defined as 4 days, giving 16 days annual leave. They might work more than 4 days per week, but this is the minimum under their contract. This employee might work different hours on each day each week.

Total gross over the past 52 weeks is $29,120. This gives an average weekly gross of $560.
The ordinary weekly pay cannot be determined for the employee due to their irregular hours, so the last 4 weeks average is used as the ordinary rate:
Four weeks ave calculation: Total gross over the past 4 weeks is $2,000. This means $500 will be used as the best estimate of an ordinary week of pay.
The amount to use for holiday pay is therefore the last 52 weeks average of $560 per week (since this is the larger of the two).
So for 1 day of Annual Holiday Pay the employee will will receive $560 divided by 4 days = $140 (a week of holidays has been defined as 4 days).

The total gross over the past 52 weeks is $29,120 and the employee earned this gross pay on 234 days. So in this example, the employee was asked to come in for additional days in some weeks, above the usual 4 days. So the days for the calculation is 234 days instead of 208 days. Note that leave days are also included in the number of days, so the 234 days includes days worked on, as well as days taken for leave.
A normal day cannot be determined for the employee, so the average daily pay is used to determine a day for sick leave, bereavement leave, etc.
The average daily rate is therefore $29,120 divided by 234 days = $124.44.
Therefore a day of sick leave, bereavement leave, alternative holiday, or public holiday not worked would be paid at $124.44.

So you can see that a day of Annual Holiday Pay could be a different value to a day of Sick Leave etc.

 

The remainder of this page deals with the leave types Sick Leave, Bereavement Leave, Alternative Holiday, and Public Holiday Day Off, but NOT with Annual Holiday Pay.

 

Details for Sick Leave, Bereavement Leave, Alternative Holiday, Public Holiday Day Off

(Note that the information below is not for the calculation of annual holiday pay - the Holidays Act gives a different formula for annual holiday pay. Have a look here for information provided by the Department of Labour / MBIE for more information about annual holiday pay).

 

Note - An Alternative Holiday (which used to be called a Lieu Day) is a day an employee gets off at a later date due to working on a public holiday. One condition of this is that the employee only accrues an Alternative Holiday if the Public Holiday they worked on was a day they usually would have worked. See here for more details about this.

When paying a day of Sick Leave, a Public Holiday Not Worked, an Alternative Day, or Bereavement Leave, Payroll Pro will show you the rates as per the Holidays Act, which Payroll Pro will calculate according to the information you have provided in the employee's setup, and the information from previous pay runs you have processed.

The rate it thinks is most applicable will be highlighted - but you can choose another calculation if required for your situation.

For a day of one of these types of leave, an employee is paid the amount they would have received had they worked on that day.
For example if the employees usual Monday is 8 hours at $20 per hour then the amount they usually earn on a Monday is $160.
Therefore the employee would receive $160 for one of the above leave types taken on a Monday.

When it is not possible to determine what the employees pay would have been for the day, then the average daily earnings can be used.
This is calculated by taking the last 52 weeks gross pay, and dividing it by the number of days to get a daily average. (Before
1st April 2011 the average daily rate was calculated using the previous 4 weeks divided by the days).

There are links below to the information provided by the Department of Labour regarding this.

 

PLEASE READ the following information on the Employment New Zealand website:

Employment NZ - Leave and holidays

 

The Holidays Act

You may also be interested in the Holidays Act - this can be found at www.legislation.govt.nz - click here for this.

Sections 9 and 9A define "relevant daily pay" and "average daily pay".