Holidays Act leave calculator
Annual holidays under the Holidays Act 2003 are paid at the greater of ordinary weekly pay and average weekly earnings. This works out both, tells you which one applies, and shows the difference.
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This calculator is a general estimate, not payroll or legal advice. Ordinary weekly pay and average weekly earnings both have precise statutory definitions, and what counts as gross earnings is not always obvious. Check Employment New Zealand, or take advice, before paying against a figure from any calculator. It does not constitute legal, HR, or professional advice and should not be relied on as a substitute for advice specific to your business, workforce, or circumstances.
Annual holiday pay calculator
Enter the employee's ordinary weekly pay, their gross earnings over the last 12 months, and how many weeks of annual holidays they are taking.
Annual holiday pay estimate
Estimates only — verify before making decisions.
Why there are two rates
The Holidays Act 2003 does not let you pay annual holidays at whatever the employee earns this week. It requires the greater of two figures, calculated separately every time leave is taken:
- Ordinary weekly pay — what the employee would normally receive for a week’s work under their agreement. Where that is not clear because pay varies, there is a statutory formula based on the last four weeks.
- Average weekly earnings — the employee’s gross earnings for the last 12 months, divided by 52.
For someone on a steady salary the two are almost identical and the choice does not matter. For anyone whose hours vary, who works overtime, or who earns commission, they diverge — and paying the lower one is an underpayment.
This is the single biggest reason a spreadsheet holding one hourly rate per employee cannot calculate New Zealand leave. It does not hold the twelve months of gross earnings the second figure needs.
Annual holidays and BAPS leave use different rules
This calculator covers annual holidays. Sick leave, bereavement leave, alternative holidays and public holidays — collectively BAPS leave — are paid at relevant daily pay, or average daily pay where daily pay varies or is not readily ascertainable. They are a different calculation on a different basis, and using the annual-holiday rate for them is a common and expensive mistake.
When 8% pay-as-you-go is allowed
The 8% figure appears in the results for comparison because it is so often misapplied. Paying holiday pay as an 8% loading on each pay is only lawful in two situations:
- the employee is on a genuine fixed-term agreement of less than 12 months, or
- the employee works so intermittently or irregularly that it is impractical to provide four weeks’ annual holidays.
It must also be agreed in the employment agreement and shown as a separate, identifiable item on the payslip. Applying 8% to a permanent part-time employee because their hours vary is not one of the exceptions — variable hours are exactly what the greater-of test is designed to handle.
After 12 months of continuous employment, every employee is entitled to four weeks of paid annual holidays.
What changes on 6 August 2028
The Employment Leave Act 2026 replaces the Holidays Act 2003 on 6 August 2028, moving annual leave from a weeks-based entitlement to hours-based accrual from day one. Until then the calculation above is the one that applies. The input that change will need is accurate hours per employee, which is what a roster and a timesheet already produce.
Or hold the earnings history that the calculation needs
The greater-of test needs 12 months of gross earnings per employee, not a single rate. RosterElf keeps the rostered and worked hours behind those earnings, tracks alternative holidays as they are earned, and exports to payroll.
Holidays Act calculator questions
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At the greater of ordinary weekly pay and average weekly earnings, for each week of annual holidays taken. Ordinary weekly pay is what the employee would normally get for a week’s work; average weekly earnings is their gross earnings over the last 12 months divided by 52. You compare the two every time leave is taken, not once a year.
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Broadly, all payments the employer is required to pay under the employment agreement — salary or wages, allowances (other than genuine reimbursements), overtime, productivity or incentive payments, commission, and the cash value of board and lodgings. Reimbursing payments, discretionary payments the employer is not bound to make, and weekly compensation under ACC are generally excluded. If a payment is contractual, assume it counts unless you have advice otherwise.
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Where it cannot be determined — usually because pay varies — the Act provides a formula: take the employee’s gross earnings for the four weeks before the end of the last pay period, subtract any irregular or one-off payments, and divide by four. That figure is then compared against average weekly earnings in the usual way.
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Four weeks of paid annual holidays after 12 months of continuous employment. “Four weeks” means four of that employee’s working weeks, so someone working three days a week gets four weeks of three-day weeks, not four five-day weeks. Sick leave is separate: 10 days after six months and then each 12 months, accumulating to a maximum of 20 days.