What you need to know about: Holidays and Leave

Who should read this?

Employers dealing with holidays and leave for staff, whether they are full-time, part-time, permanent, casual or fixed-term employees.

Why is it important?

To ensure employees receive the leave they are entitled to
To ensure employees have time to rest and attend to personal and family matters
To assist employees who are sick or have suffered a bereavement
To ensure a more productive workplace
To foster employee loyalty and reduce labour turnover

What you need to do

There are five main steps involved in managing leave for your employees:

understanding leave entitlements
calculating leave entitlements
responding to leave applications
paying leave
keeping accurate records.

This page provides checklists of the key tasks involved with each step. More detailed information is available in the Holidays and Leave – A Guide for Employers booklet.

The Holidays and Leave process

If your employees have leave variations in their existing employment agreements, check that each component of leave (i.e. annual leave, public holidays, sick leave and bereavement leave) is at least as favourable as the entitlements specified in the Holidays Act 2003, e.g. you can’t provide your employees with an extra week’s annual leave in exchange for the employee giving up their public holiday entitlements.

The previous Holidays Act provided a joint sick and bereavement leave entitlement called “special leave”. If you have employment agreements that refer to this type of “special leave”, you should renegotiate these agreements to reflect the provisions of the current Holidays Act 2003.

Annual leave checklist

If you answer no to any of the questions you may need more information.

Understanding annual leave entitlements for those working regular work patterns	Yes	No	n/a
Do you know that most employees are entitled to a minimum of 4 weeks’ paid leave, after the first year of employment?
Do you know that for employees who receive ‘pay as you go’ annual holiday pay, the minimum payment is 8% of their gross earnings? (This must be paid as a separate identifiable component of the employee’s pay)
If you have regular closedowns (e.g. over Xmas/New Year period), do you know: how to work out annual leave entitlements for this period? the minimum notice period required?
If you allow an employee to take unpaid leave, do you know how it affects their annual leave entitlements?
Do you know how to work out their annual leave entitlement if employees take leave in advance?
Do you understand the relationship between: annual leave & public holidays annual leave & sick leave annual leave & bereavement leave?

Understanding annual leave entitlements for those with changing & irregular work patterns	Yes	No	n/a
Are you aware that many employees who are described as “casual” are part-time? (e.g. retail or hospitality employees whose work pattern is established on a fortnightly roster.)
Do you know how to work out annual leave for employees with irregular hours and changing work patterns (e.g. casual & temporary employees)? principle of 4 weeks applies most common method used is to express the accruing entitlement in hours, with an annual leave entitlement of 4/52 of an hour accruing for each hour worked.
Do you know that for employees who receive ‘pay as you go’ annual holiday pay, the minimum payment is 8% of their gross earnings? (This must be paid as a separate identifiable component of the employee’s pay)
Do you know how to work out annual leave if the work pattern changes, e.g. from permanent to temporary?
Are you clear on the definition of what is a genuine fixed-term agreement?
Do you know how to calculate annual leave entitlement if the fixed-term agreement is longer than 12 months?

Paying annual leave to employees with regular work patterns	Yes	No	n/a
Do you know when annual leave/holiday pay should be paid? before the holiday commences unless the employer and employee agree the normal pay cycle will continue.
Do you know how to work out what the payment for annual leave/holiday pay should be? the greater of ordinary weekly pay or average weekly earnings.
Do you know how to work out leave/holiday entitlements if employees take leave in advance?
Do you know how to calculate payment for annual leave when the employment ends? There are 2 ways: where the employment ends within 12 months (i.e. before the employee is entitled to annual leave) where the employment ends after 12 months (i.e. when the employee is entitled to annual leave).

Paying annual leave to employees with changing & irregular work patterns	Yes	No	n/a
Do you know how to work out holiday pay for employees with irregular hours and changing work patterns (e.g. casual employees or employees who work irregular shifts)?
Do you know how to pay leave (called ‘pay as you go’) for those on fixed-term agreements or doing genuinely casual work & some of the issues to consider with this approach?
If an employee moves from fixed-term to permanent employment, do you know you will have to make changes to how their annual leave entitlement is calculated?

Keeping records	Yes	No	n/a
Do you know what information must be kept on holiday and leave records?
Do you have a system in place to keep leave records? (It is a legal requirement that you keep records of your employees’ holiday and leave entitlements. Keeping good records is critical to ensure correct entitlement and payment of annual holiday leave, especially for those with irregular work patterns.)

Responding to annual leave applications	Yes	No	n/a
Do you know when and how employees are supposed to inform you of their intention to take leave? check employment agreement expectations set between employer and employee.
Do you know how to reply to leave requests? (An employer cannot unreasonably withhold consent to a request for leave.)

Managing problem & disputes	Yes	No	n/a
If there are problems in relation to holidays and leave which could lead to disputes, such as a personal grievance, do you know where to go to for help and advice?

If you answer no to any of the questions you may need more information.

Understanding entitlements for public holidays	Yes	No	n/a
Do you know which days are public holidays?
Do you know how to work out an employee’s entitlement regarding public holidays based on the “otherwise a working day” concept?
Do you know how to work out “alternative holiday” entitlements when employees are required to work on public holidays?
Do you know there is an online tool that makes it easy to work out whether an employee is entitled to a paid public holiday?
Do you know when an employee can be required to work on a public holiday?

Working out entitlements for employees who work shifts or are on call	Yes	No	n/a
Do you know the entitlements for employees who work shifts or are on call on a public holiday?

Transferring public holidays for night shift workers	Yes	No	n/a
Do you know that employers and employees can agree to transfer a public holiday for employees working night shifts that start or end on a public holiday?

Paying for public holidays	Yes	No	n/a
Do you know how to work out payment for employees who are entitled to a public holiday using the “relevant daily pay” concept?
Do you know how to work out payment for employees working on public holidays & what the following mean: time and a half payment for time worked penal rates?

Keeping records	Yes	No	n/a
Do you know what information must be kept on holiday and leave records?
Do you have a system in place to keep leave records? (It is a legal requirement that you keep records of your employees’ holiday and leave entitlements. Keeping good records is critical to ensure correct entitlement and payment of public holidays, especially for those with irregular work patterns.)

Managing problem & disputes	Yes	No	n/a
If there are problems in relation to holidays and leave which could lead to disputes, such as a personal grievance, do you know where to go to for help and advice?

Sick leave checklist

If you answer no to any of the questions you may need more information.

Understanding sick leave entitlements	Yes	No	n/a
Do you know that most employees are entitled to sick leave after 6 months of continuous employment?
Do you know how to work out an employee’s entitlement to a sick leave day using the “otherwise a working day” concept?
Do you know there is an online tool that makes it easy to work out whether an employee is entitled to a paid sick day?
Do you know when sick leave can be taken?
Do you know unused sick leave can be accumulated and how to carry over unused sick leave?
Do you know when employees are supposed to inform you of their intention to take sick leave?
Do you know you can request proof of sickness or injury if an employee is sick or injured for 3 or more consecutive days? You can request proof of sickness within this period: if you have reason to suspect the sick leave is not genuine you advise the employee of this suspicion as soon as possible, and you meet the employee’s reasonable expenses in obtaining the proof.

Employees working changing & irregular work patterns	Yes	No	n/a
Do you know how to work out an employee’s entitlement to sick leave if their employment is not continuous (e.g. genuinely casual or temporary employees)?

Payment for sick leave	Yes	No	n/a
Do you know how to work out payment for sick leave using the “relevant daily pay” concept?
Do you know how to work out pay for employees who would normally work on a public holiday but couldn’t because they were sick?

Keeping records	Yes	No	n/a
Do you know what information must be kept on holiday and leave records?
Do you have a system in place to keep leave records? (It is a legal requirement that you keep records of your employees’ holiday and leave entitlements. Keeping good records is critical to ensure correct entitlement and payment of sick leave, especially for those with irregular work patterns.)

Managing problems and disputes	Yes	No	n/a
If there are problems in relation to holidays and leave which could lead to disputes, such as a personal grievance, do you know where to go to for help and advice?

Bereavement leave checklist

If you answer no to any of the questions you may need more information

Understanding bereavement entitlements and working out payments correctly	Yes	No	n/a
Do you know that most employees are entitled to bereavement leave after 6 months of continuous employment?
Do you know the legal requirements for bereavement leave? on death of an immediate family member (minimum of 3 days’ paid leave) on death outside of the immediate family (minimum of 1 day’s paid leave, see below).
Do you know that employees are entitled to bereavement leave in the event of a death outside the immediate family & you need to take a number of factors into consideration: how close is the association whether the employee is responsible for any aspects of the ceremonies around the death, including any cultural responsibilities?
Do you know how to work out an employee’s entitlement to a bereavement leave day using the “otherwise a working day” concept?
Do you know there is an online tool that makes it easy to work out whether an employee is entitled to a day’s bereavement leave?
Are you aware that employees do not have to use bereavement leave immediately, or on consecutive days?

Employees with changing and irregular work patterns	Yes	No	n/a
Do you know how to work out an employee’s entitlement to bereavement leave if their employment is not continuous (e.g. genuinely casual or temporary employees)?

Payment for bereavement leave	Yes	No	n/a
Do you know how to work out payment for bereavement leave using the relevant daily pay concept?
Do you know how to work out payment for an employee who would normally work on a public holiday but couldn’t because of bereavement?

Keeping records	Yes	No	n/a
Do you know what information must be kept on holiday and leave records?
Do you have a system in place to keep leave records? (It is a legal requirement that you keep records of your employees’ holiday and leave entitlements. Keeping good records is critical to ensure correct entitlement and payment of bereavement leave, especially for those with irregular work patterns.)

Managing problems and disputes	Yes	No	n/a
If there are problems in relation to holidays and leave which could lead to disputes, such as a personal grievance, do you know where to go to for help and advice?

Parental leave checklist

If you answer no to any of the questions you may need more information

Understanding entitlements	Yes	No	n/a
Do you know who is entitled to parental leave? based on time with employer and average hours worked.
Do you know there are special rules for junior doctors or teachers?
Do you know there are four types of leave available to eligible employees? special leave (up to 10 days) maternity (up to 14 weeks) partner/paternity (up to one week or two weeks depending on minimum tenure and hours test) extended leave (up to 52 weeks).
Do you know how the entitlement works for employees who have negotiated individual parental leave provisions in their agreement?

Applying for parental leave	Yes	No	n/a
Do you know the process that an employee needs to follow to apply for parental leave?
When the request for leave has been received, do you know you have three weeks to respond in writing, outlining your understanding of the leave entitlement? (If you do not agree with the request, you must provide a clear, written reason why.)
Do you know that once parental leave has been approved, then both you and your employee need to complete an application form for paid parental leave and send it to Inland Revenue?

Payment for parental leave	Yes	No	n/a
Do you know that the level of payment may change on 1 July every year & is set by the Government?
Do you know that Inland Revenue makes and manages the payment?

Return to work	Yes	No	n/a
Do you know that employees returning to work must advise you at least 3 weeks before the date of their return? (It is also the employee’s responsibility to advise Inland Revenue of their return to work or resignation if they return or resign whilst receiving the 14 weeks of paid parental leave.)

Self-employed	Yes	No	n/a
Do you know that parental leave also applies to those who are self-employed?

Managing problems and disputes	Yes	No	n/a
If there are problems in relation to parental leave which could lead to disputes, such as a personal grievance, do you know where to go to for help and advice?

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