Summarise with AI
The two figures
Annual holidays in New Zealand are not paid at "your hourly rate times your hours". They are paid at the greater of two separately calculated amounts:
- Ordinary weekly pay — what the employee normally gets in a working week. Where that is not clear, there is a statutory formula based on the last four weeks
- Average weekly earnings — gross earnings over the last 12 months divided by 52
Why the greater of the two
The comparison exists so that taking leave does not cost an employee money. Ordinary weekly pay reflects a normal current week; average weekly earnings capture the last year including overtime, commission and other variable earnings. Someone whose hours have grown is protected by the first; someone with a lumpy earnings history is protected by the second.
The comparison has to be made every time annual holidays are taken, not once a year, because both figures move. This is the single most common source of Holidays Act remediation projects in New Zealand — not fraud, just a payroll system that picked one figure and kept using it. Our free Holidays Act leave calculator works through both sides.
What it is not used for
Ordinary weekly pay applies to annual holidays. It is not the basis for sick leave, bereavement leave, alternative holidays or public holidays — those four are paid at relevant daily pay or average daily pay, a different calculation on a daily rather than weekly basis.
From 6 August 2028 the Employment Leave Act 2026 replaces the Holidays Act 2003 and moves annual leave to hours-based accrual, which changes this machinery. Until then the greater-of comparison stands.
