Holiday Pay (NZ)

Overview

Holiday Pay is typically calculated as 8% of an employee’s gross earnings and accrues from the commencement of employment.

After 12 months of continuous service:

• the existing accrual is converted into four weeks of annual leave, which is recorded in a separate leave category
• the Holiday Pay balance resets to 0 and starts to accrue again until the next 12 months of continuous service is met

The Holiday Pay accrual for employees who discontinue their employment prior to reaching 12 months of continuous service is paid out on termination.

Holiday Pay is configured with an Accrual Method of Percentage of Gross Earnings.

Set up Holiday Pay

To set up the leave category:

1. Go to Config > Leave > Add New Leave Category.

2. Select the region and click Create new Leave Category. If your portal only has one region enabled, you won’t be prompted to choose a region for the leave category.

3. Enter a Leave Category Name (eg Holiday Pay) and a Common Name if this is required.

4. Tick the Enabled checkbox so that the category can be assigned to employees.

5. Set the Accrual Method as Percentage of Gross Earnings.

6. Enter the Entitlement Percent (eg enter ‘8’ to calculate as 8% of an employee’s gross earnings each period). This is manually configured in Astute, so you can enter the percentage that you require for your entity

7. Select a Reset Anniversary.

8. Set the Rate Calculation Method as Multiplier or Dynamic Rate. This determines whether a fixed multiplier is used for calculating the leave rate or a Dynamic Rate calculation is applied.

9. Select an Entitlement Type. This is the unit that will be applied to the leave category.

10. Set the Display Order value, if required. 

11. Select which pay and leave items are used to accrue the percentage. To only choose some items, deselect ‘All Pay Items’ or ‘All Leave Items’, then tick the required items.

12. Set the remaining category settings and click Save.

Holiday Pay accrual and balance is calculated as a dollar value and will display this way on employee pay advices. As it isn’t a leave category which is ‘taken’, employees won’t be able to submit leave requests for Holiday Pay.

You can configure a leave category to allow employees to request annual leave in advance, if this is required. Any annual leave taken in advance will not reduce the Holiday Pay balance. The Holiday Pay balance will only reduce if:

• an employee is terminated and Holiday Pay accrual is paid out on termination;
• an employee reaches 12 months of continuous service and the Annual Leave entitlement category is configured to clear Holiday Pay upon accrual; or
• the Holiday Pay leave category is configured with a Reset Anniversary

Assigning Holiday Pay to an Employee

To assign Holiday Pay to an employee:

1. Go to Users > Employees > select the employee > Leave.

2. Select the Holiday Pay leave category from the drop-down list.

3. Click Assign.

When Holiday Pay is assigned to an employee, a leave category Start Date will automatically be assigned and will be used to determine continuous employment.

You can edit the Start Date or set a New Balance by clicking the Edit button, updating the field and clicking Apply Changes.