The payment for New Zealand annual holidays is generally paid at the higher rate based on the two calculations below:
The Ordinary Weekly Pay at the start of the holiday, which is based on the average of the last four weeks' pay, or
The employee’s Average Weekly Earnings for the 12-month period just before the end of the pay period before the annual holiday is taken.
Refer to Employment New Zealand for information on Ordinary Weekly Pay (OWP) and Average Weekly Earnings (AWE), and how to calculate holiday payment rates:
The link below provides more details on Annual Holidays.
Download this document for complete steps to follow to set this up in MicrOpay:
Below is an explanation of what Ordinary Weekly Pay and Average Weekly Earnings might consist of, and are examples only. The information provided in the Employment New Zealand link above should be consulted when setting up or reviewing the formulas to ensure the correct components are included.
Ordinary Weekly Pay (OWP) is based on what the employee is normally paid under their employment agreement for the four weeks or one month at the start of their holiday. This can include:
Regular allowances, such as shift allowance
Regular productivity or incentive-based payments (including commission or piece rates)
The cash value of board or lodgings
Regular overtime
Note: This does not include irregular, one-off payments or discretionary payments.
Average Weekly Earnings (AWE) are determined by calculating gross earnings over the 12 months prior to the end of the last pay period before the annual holiday is taken and dividing by 52 (i.e., 2080 hours).
The following payments can be included in the calculation:
Salary and wages
Allowances (but not reimbursing allowances)
All overtime
Piece work
At-risk, productivity, or performance payments.
Commission
Payment for annual holidays, public holidays and sick and bereavement leave.
The cash value of board and lodgings supplied.
The first week of compensation is payable by the employer under s97 of the ACC Act 2001.
Any other payments that are required to be made under the terms of the employment agreement.
Not Included:
reimbursement payments and discretionary or ex gratia payments (e.g., discretionary bonuses), this is unless the employment agreement says otherwise.
any weekly compensation payable under the Accident Compensation Act 2001 that the employer isn't bound to make.
payments when an employee is on voluntary military service.
payments for cashed-up holidays that are part of the employee's minimum earnings.