|  |
Annual Leave Changes 2007 - Auckland Chamber of Commerce
Legislation covering the change from 3 to 4 weeks a year annual holidays is contained in Schedule 1 of the Holidays Act 2003
Frequently Asked Questions
- These FAQs were prepared by the Auckland Chamber of Commerce & the employment law team of Hesketh Henry.
- Disclaimer: These FAQs are intended as a first point of reference and should not be relied on as a substitute for professional advice.Special legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.
- Originally published by the above in PDF format.
When do I have to pay holiday pay at 8%?Additional Resources
 | When do I have to pay holiday pay at 8%? |
| | When is 8% holiday pay calculated from? |
The 8% holiday pay is calculated from the employee's last anniversary date, even if that anniversary falls prior to 1st April 2007.
| | When do I have to provide the 4 weeks annual holiday under the Holidays Act 2003? |
You only need to provide 4 weeks annual holiday under the Act, once the employee has reached his or her anniversary on or after 1st April 2007.
| | What happens to the accrual for annual leave between 1st April 2006 and 31 March 2007. Does it accrue at 6% or 8%? |
| | What happens if an employee leaves shortly after 1st April 2007? |
If an employee leaves his or her employment on or after 1st April 2007 then that employee will be entitled to holiday pay calculated at 8% from their last anniversary, even though that anniversary date would fall in the 1st April 2006 to 31st March 2007 period, i.e. the effect is retrospective.
| | Employment starts on 16th March 2006. What is the leave entitlement and how does that affect the accrual for the 2005/2006 year? |
The change from 6% to 8% will have no impact on the 2005/2006 year for this employee.
As at 16th March 2007 this employee will be entitled to the three weeks holiday provided by the Holidays Act 2003.
The employee will then accrue holiday pay at 6% from 16th March 2007 until 31st March 2007.
However, on 1 April 2007 the employee's accrual from 16 March 2007 will be recalculated at 8%.
| |
What if the employee in question 6 resigns on 16 March 2007. How should leave have been accrued? Is the entitlement still 3 weeks? |
| | Anniversary start date is 1st October. Does entitlement to 4 weeks leave start on 1st April 2007 or does 4 week entitlement not start until 1st October 2007? |
The calculation at 8% do not start until 1st April 2007.
However, this employee's accrual would have been calculated at 6% from 1st October 2006.
On 1st April 2007 that accrual must be recalculated at 8% from 1st October 2006.
The employee does not have an entitlement to 4 weeks leave until 1st October 2007.
If the employee leaves on 31 March 2007 that employee would only be entitled to holiday pay calculated at 6% from 1st October 2006 but if the same employee leaves on or after 1st April 2007 then that employee would be entitled to holiday pay calculated at 8% from 1st October 2006.
|
| What happens if the employee in question 8 has only taken 1 weeks annual leave between 1st October and 1st April 2007. On April 1st 2007, is the entitlement for that employee 2 weeks (ie. 3 weeks less the one week taken) or is it 3 weeks (ie. the 4 weeks less the one week taken)? |
There are two possibilities; either (1) the employee had an entitlement to leave or (2) the leave was taken in advance.
a. If the employee took 1 weeks leave that the employee was already entitled to, i.e. it was leave the employee was entitled to as at 1st October 2006, then taking that leave would make no difference to what occurs on 1st April 2007.
On 1st April 2007 the employee's holiday pay accrual would change from 6% to 8% for the period from 1st October 2006.
b. However, if the employee had no entitlement to leave and took 1 weeks leave in advance then on 1st April 2007 that employee's holiday pay accrual would change from 6% to 8% for the period from 1st October 2006 less the amount paid for the one week taken in advance.
| | Does an employer need to make any preparations for the 8% or 4 weeks on 1st April 2007? |
An employer is not required to make any preparations but it is prudent for employers to make some provision for the sudden retrospective effect of annual leave accruals becoming 8% on 1st April 2007.
Employers will need to consider carefully how they make this provision.
Some employers have simply made provision within their budgets and will make an adjustment to payroll for 1st April 2007.
Some payroll systems are able to record the accrual now without allocating that to employees prematurely, i.e. if an employee leaves prior to 31st March 2007 that employee gets paid out at 6% only not 8%.
How employers prepare will need to be considered in relation to their own business and capabilities of their payroll systems.
Employers who make preparations do need to be careful to ensure that leave is not personally allocated to individuals prior to 1st April 2007, otherwise an employer may end up paying out leave that an employee is not entitled to if the employee leaves prior to that date.
| | If I want to make preparations and ensure I have budgeted or accrued for 1st April 2007 when do I start calculating from? |
You only start calculating from each employees anniversary date.
So for the employee in question 8 calculations would only start from 1st October 2006.
However, for the employee in question 6 those calculations would not start until 16th March 2007.
More on public holidays
|
Public Holiday Entitlements Ace Payroll receives many calls immediately after every public holiday, asking whether a particular employee is entitled to be paid for the public holiday more.. |
Public Holiday Taken Use this method for an employee who did not work on the public holiday, but would have worked had the day not been a public holiday more.. |
Public Holiday Worked Use this method for an employee who works at any time on a public holiday more.. |
| Public Holiday Calendar A facility in Ace Payroll to check when public holidays fall in this and future years more.. | Christmas and New Year 2012/2013 Working out public holiday entitlements during the 2012/2013 Christmas and New Year period more.. |
|
Waitangi Day 2012 Waitangi Day commemorates the signing of a treaty at Waitangi on 6 February 1840 more.. |
ANZAC Day 2012 Anzac Day is held on 25 April each year to commemorate New Zealanders killed in war more.. |
| Queen's Birthday 2012 The Queen's Birthday is always observed in New Zealand on the first Monday in June more.. | Southland Anniversary Day Controversy has always surrounded Southland Anniversary Day especially on when and how to observe it more.. |
|
Default Provincial Anniversary Day Select the provincial anniversary day observed by the majority of your employees to make it the default more.. | Payment For Sick Leave If Taken On A Public Holiday You are not required to pay your staff time and a half if they call in sick on a public holiday they would have otherwise worked more.. |
|
Ace Payroll FAQ Contents All the most common Ace Payroll questions grouped by categories in a short table of key words more.. | Ace Payroll Frequently Asked Questions All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more.. |
More on holiday pays
|
Cashing Up Holiday Pay From 1st April 2011 it is legal for an employee to cash up to one weeks annual leave each year more.. |
Understanding Termination Accruals Handling of accrued holiday pay upon termination can be confusing. Ace Payroll explains the concept of accruals and demonstrates how termination pay is calculated more.. | Holiday 52 Week History It is not absolutely necessary to enter a full 52 week earnings history for correct holiday pay calculation more.. |
| Holiday Pay - Daily Rates An explanation of the calculation of a daily rate for an employee taking holidays after a full years service more.. |
Employee Leave Profile The employee leave profile records which are the normal days worked by an employee more.. |
| Casual Holiday Each Pay This tutorial shows how to have Ace Payroll automatically pay a casual employee 8% holiday pay every time they are paid more.. |
Taxation of Holiday Pay This article shows how easy it is to tax holiday pay according to IRD requirements more.. |
Annual Compulsory Closedowns An annual compulsory closedown is where a business traditionally closes down for a number of weeks each year, usually over Christmas more.. |
| Changing Holiday From 8% Each Pay The procedure for changing a casual employee over to being a permanent employee in Ace Payroll for holiday pay purposes more.. |
Termination Holiday 8% Part Year Payment How to pay the 8% of part year gross for an employee who has been employed for more than a year, receives four weeks holidays a year, and is terminating their employment more.. |
| Holiday Pay Miscellaneous The reason why only full days holiday pay owing is shown on payslips rather than fractional days more.. |
|
Ace Payroll FAQ Contents All the most common Ace Payroll questions grouped by categories in a short table of key words more.. |
Ace Payroll Frequently Asked Questions All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more.. |
Other leave sections
| Public Holiday Entitlements Ace Payroll receives many calls immediately after every public holiday, asking whether a particular employee is entitled to be paid for the public holiday more.. |
Public Holiday Taken Use this method for an employee who did not work on the public holiday, but would have worked had the day not been a public holiday more.. |
Public Holiday Worked Use this method for an employee who works at any time on a public holiday more.. |
| Alternative Holidays An Alternative Holiday is a day an employee is entitled to take off as paid leave, in return for having worked on a public holiday more.. |
Annual Holiday Entitlements This article looks at entitlements to holidays as provided for by the Holidays Act more.. |
Annual Holiday Payments This tutorial shows how to record holiday pay taken for an employee in Ace Payroll using the As Per Act method more.. |
|
Irregular Work Pattern In this article we look at the calculation of Relevant Daily Pay for an employee that works irregular hours more.. | Leave Owing Report The Leave Owing report provides an estimate of holiday pay owing to all staff at a selected date more.. |
|
Ace Payroll FAQ Contents All the most common Ace Payroll questions grouped by categories in a short table of key words more.. |
Ace Payroll Frequently Asked Questions All the most common questions we are asked at Ace Payroll listed in a question format and grouped by category more.. |
