Resources
Holiday pay, in plain English.
Clear answers to the questions employers most often ask about the Holidays Act 2003, the Employment Leave Act 2026 and holiday pay remediation.
The basics
The Holidays Act, explained.
Who is entitled to holiday pay?
Every employee of a New Zealand business is entitled to be paid when they take leave under the Holidays Act 2003. That includes full-time, part-time, fixed-term and, in many cases, casual employees. Independent contractors aren’t covered.
Leave types include annual holidays, public holidays, alternative holidays, sick leave, bereavement leave and family violence leave. Employees are entitled to at least four weeks’ paid annual holidays after 12 months’ continuous employment, and employment agreements can give more. See Employment New Zealand for each leave type.
What is the Holidays Act 2003?
It’s the main law setting out leave entitlements in New Zealand, and how employers must calculate and pay annual holidays, public holidays, alternative holidays, sick, bereavement and family violence leave. Every New Zealand employer must comply with it. Read the full Act. It will be replaced by the Employment Leave Act 2026 on 6 August 2028.
What is my responsibility as an employer?
Employers are legally responsible for making sure leave entitlements, and payments for them, are correct and meet minimum standards. You can’t contract out of the Act, even if employees agree.
Complex pay or variable working arrangements make compliance harder. A “set and forget” approach to payroll carries a high risk of non-compliance, so check your settings regularly with your payroll team or provider.
Calculations
How holiday pay is calculated.
How is holiday pay calculated?
It depends on the type of leave:
- Annual holidays are paid at the greater of ordinary weekly pay and average weekly earnings. Where ordinary weekly pay can’t be worked out, a four-week average is used.
- Public holidays, alternative holidays, sick, bereavement and family violence leave are paid at relevant daily pay. Where that isn’t possible to work out, or daily pay varies within the pay period, average daily pay is used.
Errors usually come from how payroll systems apply these rules to variable hours, allowances, overtime and commission. Employment New Zealand has worked examples.
How far back do we have to recalculate?
Generally at least six years, in line with Labour Inspectorate guidance, plus anything that accrues while the fix is put in place. Some employers choose to go further.
Calculations need a year of earnings history before each period, so recalculating six years usually needs seven years of payroll data.
Law change
The 2028 leave rules.
What is changing in 2028?
The Employment Leave Act 2026 replaces the Holidays Act on 6 August 2028. Annual and sick leave will accrue in hours, and existing leave balances will convert from days to hours at the switch.
Until then, the Holidays Act applies in full and the new rules can’t be adopted early. What you owe under the current Act still has to be paid. See MBIE’s guidance.
For employees
Questions from employees.
I’m an employee. How do I know if my holiday pay is wrong?
If your pay when you take leave is similar to what you normally earn, there’s likely no issue. If it’s lower or different, you may have an issue if:
- you work irregular hours from week to week
- you have irregular work patterns, such as two weeks on and one week off
- you receive regular allowances, commission or bonuses
- you’ve changed your working pattern in the last seven years, such as from full time to part time
Talk to your employer first. If that doesn’t resolve it, contact your union, Employment New Zealand or a legal adviser.
Can ResolvePay help me as an employee?
We work with employers and can’t advise individuals. Please speak with your employer, union, an employment lawyer or Citizens Advice Bureau.
General information only, not legal advice. For your circumstances, talk to your advisers or see Employment New Zealand.
Need personalised advice?
Our holiday pay specialists can help you understand your obligations and make sure you’re on the right side of Holidays Act compliance.