Holiday pay calculator: what a week of annual leave pays
A week of annual leave pays the greater of your ordinary weekly pay and your average weekly earnings over the last 12 months. Put in both figures and the leave you are taking: the calculator compares them, pays the higher, and shows what a day and your whole break should pay before tax.
Worked out for the example. Change the boxes to make it yours.
Your average weekly earnings are higher, so a payslip that pays this leave at your ordinary weekly pay is $115.38 short for these 5 days.
| Ordinary weekly pay | $1,250.00 |
|---|---|
| Average weekly earnings ($71,000 over 52 weeks) | $1,365.38 |
| A week of leave pays the greater | $1,365.38 |
| A day of leave (a week over 5 days) | $273.08 |
| Your 5 days from 21 Dec 2026 | $1,365.38 |
- Before tax. Holiday pay in your regular pay is taxed with it; paid in advance as a lump sum, it is usually taxed as a lump sum (Inland Revenue).
- From 6 August 2028, under the Employment Leave Act 2026, each hour of leave is paid at your leave hourly rate, without the comparison with average weekly earnings (s 118).
The figures stay on this page. Saving sets your job's start date in Your Career, after asking, so it counts when each year's leave arrives. Part of the Career and Timesheets plan.
The two figures, and why the higher one wins
Section 21 of the Holidays Act 2003 says annual holidays are paid at the greater of two weekly figures. Ordinary weekly pay (section 8) is what you get for an ordinary working week, including overtime, commission and incentive payments when they are a regular part of your pay, and leaving out one-off and discretionary payments. Average weekly earnings are your gross earnings for the 12 months before the end of the last pay period before your leave, divided by 52. Gross earnings (section 14) include overtime, commission, allowances and the leave pay you received, but not discretionary payments or reimbursed costs. See ordinary weekly pay for more on the first figure.
A worked example with overtime and commission
On a $65,000 salary, ordinary weekly pay is $65,000 divided by 52, or $1,250. Add $6,000 of overtime and commission that was not regular, and gross earnings for the year are $71,000, so average weekly earnings are $71,000 divided by 52, or $1,365.38. A week of leave must pay $1,365.38, not $1,250: $115.38 more. That is the example in the calculator. When the extra pay is regular, it is already in ordinary weekly pay, and the two figures come closer together.
Days of leave, and leave in your first year
A single day of annual leave is that share of a week: the weekly rate divided by the days in your usual working week, because the Act pays the agreed portion of the entitlement at the weekly rate. Relevant daily pay and average daily pay are for sick leave, bereavement leave and public holidays, not annual leave, so this calculator does not use them. Leave before your first anniversary is leave in advance (section 22): average weekly earnings divide what you have earned since you started by the whole or part weeks you have worked, instead of 52. If you agreed to count more than a week of unpaid leave as continuous employment, the 52 is reduced too (section 16(3)).
Tax, and from 6 August 2028
Inland Revenue says holiday pay included in your regular pay is taxed with it, and holiday pay paid in advance as a lump sum is usually taxed as a lump sum. From 6 August 2028 the Employment Leave Act 2026 changes the rule: each hour of leave is paid at your leave hourly rate, which leaves out commission and allowances, and there is no comparison with average weekly earnings. Read what the Employment Leave Act changes for more.
Questions
How is holiday pay calculated in NZ?
At the greater of your ordinary weekly pay at the start of the leave and your average weekly earnings: your gross earnings for the previous 12 months divided by 52 (Holidays Act 2003, section 21).
Does overtime count towards holiday pay?
Yes. Regular overtime is part of ordinary weekly pay, and all overtime you were paid is in the gross earnings that make up average weekly earnings, so either way it can lift your holiday pay.
How much is one day of annual leave worth?
The weekly rate divided by the days in your usual working week. On a weekly rate of $1,365.38 and a five-day week, a day is $273.08 before tax.
Why is my holiday pay higher than my normal pay?
Because your average weekly earnings over the last year, including commission, overtime and allowances, are higher than your pay for a normal week, and the law pays the greater of the two.
What happens when I save this?
Holiday pay rates are not stored in your account. Saving sets the start date of your job in Your Career, after asking, so it can count when each year's leave arrives. Your Career is part of the Career and Timesheets plan.
Sources
- Holidays Act 2003, sections 5, 8, 14, 16, 21 and 22.
- Employment Leave Act 2026, sections 2 and 118.
- Employment New Zealand: annual holiday pay.
- Employment New Zealand: calculating holiday and leave pay.
- Inland Revenue: taxing holiday pay.
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