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How Is Holiday Pay Worked Out?
 | Department of Labour. |
Holiday pay for a full year’s entitlement is calculated in three simple steps.
Step 1
Your employer works out the weekly average of your total gross earnings by dividing your total gross earnings for the whole of the year of employment by 52. This gives your average weekly earnings. (Note: total gross earnings means all salary, wages, overtime pay, allowances, commission, and any previous holiday pay paid.)
Step 2
Your employer then works out what your ordinary weekly pay is by multiplying your ordinary hourly rate of pay by the number of hours you normally work each week. This gives your ordinary weekly pay.
Step 3
Whichever of these amounts is the LARGER becomes the rate of your weekly holiday pay.
Here’s an example
Step 1
Say your total gross earnings for the year February 2005 to February 2006 are $32,000. Divide this by 52 to get your average weekly earnings of $615.38
Step 2
Your ordinary weekly pay is $625.00
Step 3
The larger of these is ordinary weekly pay.
Therefore, holiday pay for each week of your holiday is $625.00.
Holiday pay at the end of employment
All holiday pay due to an employee (i.e. total entitlement less any holiday pay already received) should be paid to the employee at the time the employee leaves the job.
Employees who work for less than four weeks are entitled to holiday pay of 8% of their total ordinary pay.
Employees who work for more than a year are entitled to:
- holiday pay for the completed year; plus
- 8% of total gross earnings for the remaining part year.
Further help & information
Employment Relations Infoline can give you further advice and assistance about issues in this fact sheet. Contact us on 0800 800 863 or visit our website at www.ers.dol.govt.nz
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Please note: As a summary, this fact sheet covers common problems. It will not answer every question and should not be used as a substitute for legislation or legal advice. The Department of Labour takes no responsibility for the results of any action taken on the basis of information on this leaflet nor for any errors or omissions. |
Cashing up holiday pay
Annual compulsory closedowns
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Holidays Act 2003