Leave entitlements in New Zealand are governed by the Holidays Act 2003, and it is widely acknowledged to be complicated.
The compliance problem
Commentary on New Zealand employment law notes that unintentional non-compliance with the Holidays Act is common and compliance costs are high, largely because the Act does not map neatly onto modern work patterns.
That is unusual to see stated openly, and it means checking your own holiday pay is worthwhile rather than paranoid.
Annual holidays
Employees are entitled to paid annual holidays under the Act, with the calculation depending on your pattern of work and earnings.
For employees with regular hours and pay, the calculation is straightforward. For those with variable hours, commission or irregular patterns, it is where errors concentrate.
Final pay and holidays
Compensation for unused annual holidays must be included in your final pay, provided on or before the pay day for the final pay period.
Changes to the Holidays Act have been proposed to align it better with modern work practices. Commentary suggests the complexity is unlikely to be fully resolved, and that transitioning to a new Act with new payroll systems will be a significant exercise for employers.
If you are reading guidance on holiday pay, check whether it reflects the current Act.
What to check
- That your holiday pay calculation accounts for your actual earnings pattern, not just base salary
- That commission, overtime and allowances were included where they should be
- That unused holidays appear separately in your final pay breakdown
If you think it is wrong
Raise it with your employer. Employment New Zealand provides free guidance on 0800 20 90 20.
Remember the 90-day personal grievance window if the issue relates to a dismissal, though pay claims can follow a different route.
Records
Employers retain records for at least six years. Keep your own payslips — for variable earners especially, they are the evidence of what should have been included in the calculation.