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Paying employees when they are on holiday or leave

Working out what to pay staff can be tricky, especially when their pattern of work or pay rate changes. Government has been creating tools to help businesses work out what to pay for time off work, eg bereavement leave, alternative holidays, public holidays or sick leave. Check out the flowcharts and guidance for employers and employees on the Employment New Zealand website.

Guides to get it right

Business.govt.nz and Employment NZ have received lots of questions from businesses about how to pay staff correctly when they are on different types of leave. This can be difficult and time consuming. Employment NZ have been creating new guidance and tools to help figure out staff pay in different situations. More tools are on the way. These are also useful for employees to check they are getting what they should.

New guidance and tools

The latest topics and tips added to the Employment New Zealand website include:

Payment for working a public holiday: You must pay all employees at least time and a half for working on a public holiday.

Pay for public holidays, sick and bereavement leave and alternative holidays (external link)

Relevant daily pay (RDP) vs average daily pay: If you can calculate RDP, this is the best rate to use to stay within the law.

Relevant daily pay and average daily pay (external link)

What is included in RDP: Payments the employee doesn’t get every day, but would have got if they had worked on that particular day.

Relevant daily pay and average daily pay (external link)

Advice for employees on qualifying for sick or bereavement leave: Employees on all types of employment agreement, even casual agreements, may be entitled to sick and bereavement leave.

Sick leave entitlements (external link)

Annual leave tools for employers and employees

These tools and guides are already on the Employment New Zealand website. It’s a good idea to print out the flowcharts as a handy reference.

Pay-as-you-go instead of annual holidays: When it’s OK to pay an employee 8% extra instead of giving them paid time off — only an option for some employees on fixed-term contracts or with changing work patterns.

8% instead of annual holidays flowchart (external link)

Annual holiday pay rates: There are two rates to work out when paying an employee on annual leave — ordinary weekly pay (OWP) and average weekly earnings (AWE). You must pay whichever is higher. Here’s how to work out both rates.

Guide to annual holiday pay rates (external link)

Minimum leave and holiday entitlements: A summary of what employees must get, and why it's important.

Guides for employers and employees (external link)

Payroll must-knows: Visual guides for employers and employees on the dos and don’ts of calculating holidays and leave payments.

Payroll must-knows (external link)

Annual closedowns: What to consider if you have an annual closedown requiring employees to take annual leave, or unpaid time off if they have no annual leave available, and when you must pay employees 8% of gross earnings when you close down.

Annual closedowns (external link)

Leave without pay: How unpaid time off work might affect an employee’s leave entitlements, eg anniversary dates and/or pay rates for annual leave.

Guide to leave without pay flowchart (external link)

Final pay: How to work out the last pay packet when an employee resigns, or is dismissed.

Termination pay flowchart (external link)

For those keen to dig into the detail, there’s an in-depth guidance document.

Pay for leave and holidays guidance (external link) — Employment New Zealand

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