Ordinary weekly pay: how your annual holidays are paid

What counts as ordinary weekly pay

Section 8 of the Holidays Act 2003 defines it for one purpose: paying annual holidays. It is the pay you receive under your agreement for an ordinary working week, and it includes:

• productivity or incentive payments, including commission, if they are a regular part of your pay;
• overtime, if it is a regular part of your pay;
• the cash value of board or lodgings your employer provides.

It leaves out irregular commission and overtime, one-off or exceptional payments, payments your employer is not bound to make, and employer superannuation contributions. Employment New Zealand adds that regular allowances, such as a shift allowance, belong in it, and that it is the payment that must be regular, not its size: overtime you do most Mondays counts even when the hours vary, while overtime once every three months does not.

Your agreement can set a special rate of ordinary weekly pay, but only if it is at least what the law would give. Sick, bereavement and family violence leave and public holidays are paid by the day instead, at relevant daily pay or average daily pay.

The four-week formula

For many people the figure is obvious, because every week pays the same. When it is not possible to work out ordinary weekly pay that way, for example because your hours vary by more than a little or your overtime is regular but unpredictable, section 8(2) gives a formula:

1. Take your gross earnings for the 4 calendar weeks before the end of the last pay period before the calculation. If your normal pay period is longer than 4 weeks, use that pay period instead.
2. Take off irregular commission or incentive payments, irregular overtime and any one-off or exceptional payments.
3. Divide what is left by 4.

Then compare it with your average weekly earnings: your gross earnings for the 12 months before the end of the last pay period before the holiday, divided by 52. You are paid the higher of the two.

A worked example: varying hours

Hemi earns $28 an hour. His hours run from 30 to 40 a week, and most Saturdays he works overtime, though never the same amount. His employer cannot say what an ordinary week pays, so it uses the formula when he takes two weeks' annual holidays.

Had his last four weeks been quiet, average weekly earnings would have won instead, which is the point of the comparison: a slow month cannot drag your holiday pay below your weekly average for the year. Employment New Zealand says the calculation for a whole period of holidays is done once, at the start.

On leaving, and the change in 2028

When you leave, annual holidays you are entitled to but have not taken are paid at the higher of your ordinary weekly pay as at your last day or your average weekly earnings over the previous 12 months. Our page on final pay covers the rest of what your last pay must include, and our guide to leave entitlements in New Zealand covers when the four weeks become yours.

Your Career's Leave section keeps your annual leave balance and, once your pay is recorded, estimates what it would be worth if paid out, noting that your employer's figure can be higher because it uses the higher of these two measures. The demo shows it with no account needed.

Ordinary weekly pay belongs to the Holidays Act 2003. The Employment Leave Act 2026 replaces it on 6 August 2028; until then the current rules apply, and Employment New Zealand says employers cannot follow the new law early. Under the new Act, annual leave builds up in hours, at least 0.0769 of an hour for each standard hour, and is paid for each hour taken, with no ordinary weekly pay or average weekly earnings.

Know what your leave is worth