Holiday pay, worked out the way the law says

In New Zealand, you get 4 weeks of paid annual holidays once you have worked for the same employer for 12 months. Your holiday pay is the higher of two amounts: your ordinary weekly pay or your average weekly earnings.

The Holidays Act 2003 still applies today. A replacement, the Employment Leave Act 2026, is passed but does not start until 6 August 2028. Employers cannot use it early, so the current rules below are the ones that count. This is general information, not legal advice.

The basics

• You are entitled to 4 weeks after 12 months of continuous employment.
• You choose when to take them, but your employer must agree or have a good reason to say no.
• Your employer must let you take at least 2 of the 4 weeks in one block, within 12 months of becoming entitled.
• If you cannot agree on timing, your employer can require you to take leave with at least 14 days' notice.

How holiday pay is worked out

Ordinary weekly pay is what you normally get for a usual working week. Average weekly earnings is your gross pay over the last 12 months divided by 52. Your employer must pay whichever is higher.

The 8% rule

Some people are paid 8% of gross earnings with each pay instead of taking paid leave. This is allowed only for genuine fixed-term agreements under 12 months, or work so irregular that normal holidays are impracticable. It must be written into the employment agreement and shown separately on payslips. If an employer uses it when the conditions are not met, the worker still gets 4 weeks of paid holidays and keeps the 8% already paid.

Public holidays, cash-up and closedowns

• If a public holiday falls on a day you would normally work during your leave, you take it as a public holiday. It does not use up your annual holidays.
• You can ask to cash up to 1 week of your annual holidays each year. Your employer has to agree.
• Employers must give 14 days' notice of an annual closedown. If you have holidays saved, you use them for the closedown.
• If you are not yet entitled, your employer pays you 8% of your gross earnings and your holiday anniversary date is reset to the closedown start date or a nearby date the employer picks.

When you finish a job

Your final pay must include any annual holidays you are owed. That means paid-out leave at the higher of ordinary weekly pay or average weekly earnings, plus 8% of gross earnings since your last anniversary date. Anything already paid in advance or pay-as-you-go comes off. It is due on or before pay day for your final pay period.

The catch

Your pay slip will not show these calculations, so mistakes are easy to miss. Overtime, regular bonuses and changing hours all affect average weekly earnings, and the two methods can give quite different results. Check the figure yourself, and ask for the working in writing if it looks low.

Do this next

1. Find your anniversary date, the day you started with your employer.
2. Check your agreement for your ordinary weekly pay and any 8% clause.
3. Add up your gross pay for the last 12 months and divide by 52.
4. Compare that number with your ordinary weekly pay and use the higher one.
5. Ask your employer in writing for the dates you want, giving plenty of notice.

Want to skip the sums? Try our holiday pay calculator to check your own figure.

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Last reviewed 3 October 2026. Written by The Daily Kiwi from the official pages listed above.