Setting up an employee on parental leave and paying annual leave upon their return

ANSWER ID:23049

1. Setting up an employee on parental leave

Go to the Maintenance command centre and click Maintain Employees.
Click Select Employee.
Click the applicable employee then click OK.
Click the Leave Details tab then click the Other Leave tab.
In the Parental Leave section:
- Enter the Commencement Date
- Enter the Return to work date. This can be the expected Return to work date, and it can be changed at any time if required.
  Here's our example:
Go to the Reports menu, choose Employee Reports then choose Parental Leave Details as shown below.
Display the report for the applicable employee. This report will offer the following information:
1. Employee Code
2. Name
3. IRD Number
4. Tax Code
5. Date started
6. Expected Finish Date (if applicable)
7. Date Parental Leave started
8. Date Returning from Parental Leave and how many weeks this is from the PL start date
9. Length of Employment
10. Normal days per week
11. Ordinary weekly earnings
12. Date Parental Leave Commenced
[Optional] Print the Parental Leave Details report for your records.

No pays need to be processed while the employee is on Parental Leave.

2. Paying annual leave upon their return

If the employee...

then...

has unused annual holidays before going on parental leave

The normal calculation for annual holidays will apply to those holidays—regardless of when they are taken. They are paid at the greater of ordinary weekly pay or average weekly earnings at the time they take the annual holidays.

becomes entitled to annual holidays during parental leave (or in the next 12 months after their return)

The pay for those annual holidays is calculated at the rate of the employee’s average weekly earnings over the 12 months just before the end of the last pay period before the annual holiday is taken (with no comparison to ordinary weekly pay).

If this is the case for your employee, complete the steps below to process the leave.

For more information on this ruling, refer to the Department of Labour. Our page Parental leave affecting annual leave and annual holidays might also be useful.

Go to the Maintenance command centre and click Maintain Pay Codes.
Click the ANHL (Annual Leave) pay code.
Click the General tab.
Select the option Allow the rate to be modified when entering pay details.
Go to the Prepare Pays command centre and click Enter Pays.
Double-click the applicable employee.
Click the Leave button on the right-hand side of the window. The Leave Due window is displayed.
Click the ellipsis button (...) for the Annual Leave calculation as shown below.
Click the ellipsis button (...) for the Ordinary Weekly Pay as shown below.
Select the option Use Average Weekly Pay as shown below. This will re-calculate the Annual Leave Rate to use the Average Weekly Earnings. This will also remove the Ordinary Weekly Pay calculation which is not required for this process.
Click OK. You will now be able to continue processing the pay as you normally would.

What if an employee reduces their hours after parental leave?

If an employee returns from parental leave on reduced hours, learn how to reduce their Normal Hours per week.