Annual leave liability calculator: what your team's leave is worth today
Annual leave liability is each person's balance in weeks times the greater of their ordinary weekly pay and their average weekly earnings over the last 12 months, the rate the Holidays Act 2003 pays it at, plus 8% of pay since their last anniversary for leave not yet due. Type each balance and pay. The calculator values the team's leave with KiwiSaver and ACC on top.
Worked out for the example. Change the boxes to make it yours.
Ben holds 6.4 weeks: more than a year's 4 weeks. The Act says you must let staff take annual holidays within 12 months of the entitlement arising, and if you cannot agree when, you can require them to be taken with at least 14 days' notice (Holidays Act 2003, ss 18 and 19).
| Aroha: 18 days (3.6 weeks) at $1,275.00 a week, average weekly earnings | $4,590.00 |
|---|---|
| Ben: 32 days (6.4 weeks) at $1,000.00 a week | $6,400.00 |
| Chloe: 9 days (3 weeks) at $720.00 a week | $2,160.00 |
| Dev: 12.5 days (3.13 weeks) at $1,125.00 a week, average weekly earnings | $3,515.63 |
| Annual holidays already owed | $16,665.63 |
| Leave built since the anniversaries (8% of $96,000) | $7,680.00 |
| Employer KiwiSaver when it is paid: 3.5% | $852.10 |
| ACC levies at $0.48 per $100 | $116.86 |
| Annual leave liability | $25,314.58 |
| Weeks of annual holidays held, all together | 16.13 weeks |
- Each balance is worked out the way the Act pays it: weeks of holidays at the greater of ordinary weekly pay and average weekly earnings over the last 12 months. A balance in days becomes weeks over the days the person works in a week.
- No pay for the last 12 months for Chloe, so ordinary weekly pay is used. Where overtime, commission or allowances lift the year's pay, average weekly earnings can be higher.
- Leave built since each person's last anniversary is valued at 8% of their gross pay since then, which is what the Act pays if employment ends before the next anniversary.
- Pay rises change the figure: a balance is paid at the rate when the holiday is taken, not when it was earned.
Team timesheets shows the hours staff choose to share, by person, project and task, with a CSV ready for payroll. Optional approvals, billable and private cost rates, hours budgets and team invoices are all included in the seat. It never reads the pay or rates in anyone's own account.
See Team timesheetsThe rate the Act pays leave at
Under section 21 of the Holidays Act 2003, annual holidays are paid at the greater of ordinary weekly pay when the holiday starts and average weekly earnings, which is 1/52 of gross earnings in the 12 months before the last pay period. Section 24 uses the same rate for holidays still owed when someone leaves. So the honest value of a balance is the weeks held times the higher of the two. A balance kept in days becomes weeks over the days the person works in a week: 18 days on a five-day week is 3.6 weeks. Overtime, commission and allowances in the last year count in gross earnings, so for staff whose pay moves about, average weekly earnings often set the rate. Our holiday pay calculator works out one person's week.
Leave built since the last anniversary
Someone becomes entitled to 4 weeks after each 12 months of continuous employment (section 16). Between anniversaries the next 4 weeks is building but not yet owed as time off. If employment ends in that time, section 25 pays 8% of gross earnings since the last anniversary, and section 23 pays 8% since the start for anyone who leaves in their first year. The calculator values that part at 8% of the pay you enter for it. Holiday pay is also liable earnings for ACC, and Inland Revenue counts any remuneration before tax in gross pay for KiwiSaver except listed items such as redundancy, so both are added when the leave is paid. Our final pay calculator shows the same rules for one person leaving.
Bringing a large balance down
Section 18 says an employer must let staff take annual holidays within 12 months of the entitlement arising, and must not unreasonably refuse a request. If you cannot agree when, section 19 lets you require holidays to be taken with at least 14 days' notice. An employee may ask in writing to cash up to 1 week a year (section 28A); you can say no, and it is paid at the same rate. A balance taken this year costs less than the same balance taken after a pay rise, because it is paid at the rate on the day. Our article on whether an employer can make you take annual leave covers the notice rules.
From 6 August 2028
Under the Employment Leave Act 2026, holidays held on the day it starts convert to hours: weeks owed times ordinary weekly hours, and leave built since the last anniversary pro rata (Schedule 1, clause 12). Leave is then paid at the leave hourly rate, the lowest hourly rate in the agreement or the salary for a standard hour, without the comparison with average weekly earnings (section 118). For staff whose pay moves with overtime or commission, the value of a balance can fall. Our article on the Employment Leave Act changes explains more.
Questions
How do you calculate annual leave liability in NZ?
For each person, turn the leave balance into weeks and multiply by the greater of their ordinary weekly pay and their average weekly earnings over the last 12 months. Add 8% of their gross pay since their last anniversary for leave building towards the next entitlement, then employer KiwiSaver and ACC on top.
What is average weekly earnings for holiday pay?
One fifty-second of gross earnings in the 12 months before the end of the last pay period, including overtime, commission and allowances. Annual holidays are paid at the greater of that and ordinary weekly pay.
How do I convert leave days into weeks?
Divide the days by the days the person works in a week. 12.5 days for someone on a four-day week is 3.125 weeks, valued at 3.125 times their weekly rate.
Can I make staff use up their annual leave?
Yes, if you cannot agree when they take it: the Holidays Act 2003 lets you require annual holidays to be taken with at least 14 days' notice. You must also let them take holidays within 12 months of the entitlement arising.
Is KiwiSaver paid on holiday pay?
Yes. Inland Revenue counts remuneration of any kind before tax in gross pay for KiwiSaver, except listed items such as redundancy payments, so the employer contribution of at least 3.5% applies when the leave is paid.
Does Team timesheets keep leave balances?
No. Team timesheets at jobtracker.co.nz shows the hours staff choose to share, by person, project and task, with a CSV ready for payroll. It does not keep leave balances or work out holiday pay; your payroll does.
Sources
- Holidays Act 2003.
- Employment New Zealand: annual holiday pay.
- Employment New Zealand: taking annual holidays.
- Inland Revenue: employer contributions to KiwiSaver schemes and complying funds.
- Inland Revenue: gross pay for KiwiSaver schemes and complying funds.
- business.govt.nz: ACC levies.
- Accident Compensation (Work Account Levies) Regulations 2025, Schedule 2: rates for 2026/27.
- Health and Safety at Work (Rates of Funding Levy) Regulations 2016.
- Employment Leave Act 2026, in force 6 August 2028.
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