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How to pay reduced hours of a temporary nature - annual leave seems to get messed up

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How to pay reduced hours of a temporary nature - annual leave seems to get messed up



I have three full time employees on annual salaries.

Two get four weeks annual leave a year 150 hours and one gets 5 weeks 187.5 hours.


Due to less work instead of everyone working 37.5 hours over 5 days now everyone is

just going to work 30 hours over 4 days.  This may be for 2  months or 1 year depending on work.

So I went into annual salary and put them down by 20% and 30 hours over 4 days.

However in the annual leave area the opening available balance got reduced but why.

This is annual leave entitlement from the last year end anniversay based on them working 37.5.

I have always had them showing by hours and both annual and accrued have shown on the payslip.

Surely this does not need to be altered and I would have thought the accrued leave to date would still

need to be on the 37.5 and that seems to have to be reduced too.


At a loss.  Maybe I should just keep everything as is and just go in and say 30 hours each payrun.  Basicly that means in effect they are taking unpaid leave of 1 day a week.  The annual holiday will just still go on accruing.




Ultimate Partner
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New Zealand
Ultimate Partner




Re: How to pay reduced hours of a temporary nature - annual leave seems to get messed up

Hi @Sue8 

Which payroll programme are you using?

The Essentials Payroll had an update last week which would change the annual leave entitlements if you reduced normal hours per week.

What is your intention with your employees - is this a technically permanent change to their hours per week - was there an amendment to their employment agreement? - If so then the annual leave entitlement would reduce as well - as annual leave is reported as a 4 week entitlement of their normal hours per week.

If your change is a temporary one during Covid - and there was no change to the employment contract - then the normal hours per week should stay at 37.5 - however you pay them a bit less. This would still accrue at the std 150 hours per year.

You need to have a read of how annual leave is calculated on the hub MYOB

Choose the product you are using then choose "Managing Annual Leave Holidays in weeks"

Jennie Kingma
JK Business Systems Ltd, Hamilton, NZ

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