Paying leave in New Zealand - what’s changed?

[Taelor_R]

To help you stay compliant with Inland Revenue, we’ve made a few simple changes to the employee details and pay run pages.

The way you process leave won’t change much, but you’ll need to enter the days your employees work in their employee details page, and the days being paid in each pay run.

These changes affect bereavement leave, alternative holidays, public holidays worked and taken, and sick leave. These types of leave are now paid at a daily rate, rather than an hourly rate.

This post will give you a more detailed explanation.

What’s changed?

In terms of your workflow, not a lot.

1. For each full-time, part-time, and fixed-term employee you have, you’ll need to go into their Employee details page, scroll down to Pay details, and enter the number of days they normally work. If your employee’s work schedule isn’t easy to define using days-per-week, enter their normal or average days.
   
   This field isn’t mandatory for casual employees.
   
   If you want this number to be pre-filled for you when you do a pay run, tick Autofill days in the employee’s pay run.
   
   
2. If you haven’t filled in an employee's normal days, you’ll see a reminder in the pay centre. You’ll still be able to do a pay run, but you won’t be able to pay any leave except annual leave.
   
   
   
3. When you do a pay run you’ll see a new field called Days being paid this period. Here, enter the total number of days your employee is being paid for - including days they’ve worked, and any paid leave they’ve taken.
   
   
   
   
4. When you pay any leave types other than annual leave, you’ll pay them at a daily rate rather than an hourly rate.
   

And that’s it!

Is there anything else I should know?

If you want the nitty gritty of leave calculation, here are two more facts.

Pay items

When you set up a pay item the checkbox which formerly said Exclude from AWE OWP calculations checkbox now says Exclude from gross earnings for leave calculations.

The pay item will be excluded from both AWE & OWP (Average Weekly Earnings and Ordinary Weekly pay) calculations and RDP & ADP (Relevant Daily Pay & Average Daily Pay) calculations (i.e. all leave calculations).

Average Daily Pay

Average Daily Pay uses an employee's pay and work history to calculate what they should be paid per day for leave.

Since bereavement leave, alternative holidays, public holidays worked and taken, and sick leave are now calculated using days rather than hours, you’ll need to check that this calculation is correct when you’re paying an employee leave using Average daily pay.

To check, click Gross earnings for 12 months and make sure that the historical days worked are accurate.

Because days worked is a new field, past periods are estimated. The estimated days are marked with an asterisk in the Pay history window.

If the estimate is not correct, close the Pay history window and enter the correct number in the Days worked field.