As we approach the Christmas and holiday season in New Zealand, businesses will start to consider employee annual leave and holiday pay.
Holiday pay and annual leave can be tricky to calculate during the holiday period, especially for part-time or casual workers. If your business employs staff, here’s what you need to know.
Public Holiday Pay
If a public holiday falls on a day your employee would normally work, they are entitled to a paid day off. The main dates you need to be aware of this holiday season are:
Christmas Day: Wednesday 25 December
Boxing Day: Thursday 26 December
New Year’s Day: Wednesday 1 January, 2025.
The day after New Year’s Day: Thursday 2 January 2025.
It’s worth noting that if a public holiday falls on a weekend day (e.g. if Christmas falls on a Sunday) and the employee doesn’t normally work that day, the holiday is moved to the following Monday. However, we don’t need to worry about that this year.
If your employees plan to take annual leave over the holiday period, remember public holidays don’t count as annual leave days.
Paid Annual Leave
In New Zealand, under the Holidays Act 2003 all employees are entitled to four weeks paid annual leave per year after 12 months of continued employment. This applies to all employees, no matter their type of employment.
Annual leave entitlement is calculated based on an employee’s regular working week. So, if a part-time employee works 3 days a week at 8 hours a day, they will be entitled to 12 days paid annual leave. This is calculated as a proportion of full-time workers' annual leave (i.e., 3 days x 4 weeks = 12 days annual leave).
Many companies allow employees to accrue leave, even if they haven’t been with the company for 12 months. Whether a business allows this is dependent on your business's policy.
Accrued leave is when an employee’s leave builds up over each paid period and is available to be taken in as leave in advance. It is then deducted from an employee's final pay when they leave the company. Whereas, Earned leave is added to an employee's annual leave entitlement and is made available when they reach their 12-month employment anniversary.
Managing Holiday Pay Over Christmas
The lead-up to Christmas is busy for many businesses as they deal with holiday sales and Christmas shopping, people preparing for annual leave and wrapping up final projects for the year. It can be helpful to have a plan because the last thing you want to do is pay your staff on Christmas Eve. Here are 8 tips to help you be prepared for the holiday period.
#1. Closing for the holiday period
If you’re planning to close the office for the holiday period, you need to give your employees at least 14 days’ notice. If employees have annual leave available, they must use this during the closedown period. If not, they can take unpaid leave, but you will need to pay them for public holidays.
#2. Staying open
If you plan to stay open during the holiday period, you’ll need to work out which days your business will still be open and how many staff you’ll need. Employees who work a public holiday are entitled to be paid time and a half for each hour worked. They are also entitled to a ‘day in lieu’ or an alternative holiday date to be taken later on a day they normally work.
#3. Change your payday
If your usual payday falls on a public holiday, you will need to check and advise staff if this date will change or if they will be paid in advance. Let everyone know when they can expect to be paid over the holiday period.
#4. Calculate and plan Annual Leave in advance
Payroll systems like Smartly have a future leave balances feature built into their employee app, which can come in handy when estimating Christmas leave. They’re also simple formulas to help you plan and calculate the amount of leave your staff may accrue between now and Christmas.
#7. Don’t forget PAYE filing
Ensure you file your payroll on time to avoid penalties. Filing Employment Information each payday can be challenging for many employers; however, it is important to ensure you file on time to ensure your employees have the right deductions and entitlements.
#8. Use a payroll expert
As an employer, you are responsible for making sure your employees receive their correct entitlements, and that you pay them correctly for the work they do. It is surprisingly easy for an employer to make a mistake — especially with holiday pay.
New Zealand employment law is constantly evolving. Keeping up with minimum wage hikes, tax code updates, and KiwiSaver changes can be a full-time job in itself. A qualified bookkeeper stays on top of these changes, ensuring your payroll adheres to the latest regulations.
A good bookkeeper goes beyond crunching numbers. They act as a trusted advisor, offering insights into your financial health and identifying areas for cost-optimisation within your payroll system. They can also help you choose the right payroll software, automate repetitive tasks like calculating deductions and generating payslips, and provide reports that give you insight into your workforce.
If you have any questions about payroll, holiday pay, legislation, payroll software, or reporting let’s have a free no-obligation chat. Protect your business and your employees and get in touch today!
