Under the Holidays Act 2003, employees in New Zealand are entitled to at least four weeks of paid annual holidays after 12 months of continuous employment. Holiday pay is calculated using the 'greater of' rule — ordinary weekly pay or average weekly earnings over the previous 52 weeks.

Statutory entitlement

Four weeks of paid annual holidays per year, available after 12 months of continuous employment. Pay-as-you-go (8% of gross earnings) is permitted only for fixed-term employees of less than 12 months and for genuinely intermittent or irregular employment.

Eligibility

All employees, regardless of hours, after 12 months of continuous service. Before the 12-month anniversary, employers and employees may agree to take holidays in advance.

Employer obligations

  • Provide four weeks of paid annual holidays after 12 months of continuous employment.
  • Calculate holiday pay using the greater of (a) ordinary weekly pay at the time the holiday is taken, or (b) average weekly earnings over the 12 months ending immediately before the leave.
  • Pay annual holidays in advance unless the employee agrees otherwise.
  • On termination, pay 8% of gross earnings since the last holiday anniversary, less any holiday pay already paid in advance.

Employee rights

  • Right to take at least two of the four weeks consecutively if requested.
  • Right to be paid the greater of ordinary weekly pay or average weekly earnings.
  • Right to a paid alternative holiday ('day in lieu') if a public holiday falls on a day that would otherwise have been worked.

Common pitfalls

  • Calculating holiday pay on base salary only, ignoring commission, regular overtime, and productivity payments captured by 'gross earnings'.
  • Applying pay-as-you-go (8%) to permanent employees, which is unlawful in most cases.
  • Failing to identify 'otherwise working days' for closedown and public holiday calculations.
  • Underpaying terminations by missing the 8% gross earnings owed since the last holiday anniversary.

The 'greater of' calculation

For each week of annual holidays, employers must pay the greater of ordinary weekly pay (the contractual or normal weekly amount) or average weekly earnings (gross earnings in the previous 12 months divided by 52). For employees with variable pay or commission, this typically results in a higher payment than base pay alone.

Closedowns

Employers may have one customary closedown period per year (such as Christmas to mid-January) and require employees to take annual holidays during it. At least 14 days written notice is required, and employees who have not yet accrued enough leave are paid 8% of their earnings since starting (or since the last anniversary).

Frequently asked questions

When can I take my annual holidays in New Zealand?

After 12 months of continuous employment, you become entitled to four weeks of paid annual holidays. Before then, you and your employer can agree to take holidays in advance.

Is holiday pay paid weekly with my regular pay?

Generally no. Pay-as-you-go (8% added to each pay) is only allowed for fixed-term employees of less than 12 months or for genuinely intermittent work. Most employees should be paid annual holidays when they take them.

Sources

This page is provided for general guidance and does not constitute legal advice. Always check the cited primary source for current law before making employment decisions.