Understanding Annual Leave Pay Rates

by Vicky Taylor

There has been a lot of attention in the media recently about the rules and fallout surrounding annual leave payment rates.

The Ministry of Business, Innovation & Employment website states:

Payment for annual holidays is made at the start of the employee’s holiday and is at the rate of the greater of the employee’s ordinary weekly pay or average weekly earnings.

What this means is that if you worked any extra hours or received any extra taxable payments like incentive bonuses for example, they need to be factored into your holiday pay rate.

Watch the video below for a brief example:

If your staff work variable hours, recording and calculating the average can be tricky without compliant software. And while some software might allow you to do this, it can often be too hard to understand and apply.

PaySauce always uses the higher value when calculating holiday pay, so you can be assured that you're compliant with New Zealand legislation everytime your staff go on holiday.

For more information around the rules regarding annual leave payments, visit the MBIE website.

If you aren't using PaySauce and would like to know more about how we can save you time and ensure compliance, contact us today.

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Posted on 13 March 2018

Vicky Taylor
Head of Customer Experience

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