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Pay rates for annual leave

Ace Payroll automatically calculates pay rates for annual leave - all you need to do is confirm them.  

This page contains information about how payments for annual leave are calculated.

For instructions visit Annual leave. 


Calculation and legislation

Annual leave pay rates are defined by section 21 (Calculation of ordinary holiday pay) of the Holidays Act 2003. 

You are required to pay the greater of:

  • the employee’s ordinary weekly pay as at the beginning of the annual holiday, or

  • the employee’s average weekly earnings for the 12 months immediately before the end of the last pay period before the annual holiday.  
     

 Ordinary weekly pay is defined by section 8 (Meaning of ordinary weekly pay), and means the greater of:

  • an employee's usual pay at the time of taking the holiday, or

  • the employee's average earnings over the previous four weeks.

If you do not have 12 months worth of pay history for an employee, use the ordinary weekly pay method.

Daily pay for annual leave is calculated either from the employee’s ordinary weekly pay or from their average weekly earnings, divided by the days per week that they work.

All of these rates are calculated automatically when you pay annual leave with Ace Payroll.

Calculation of pay rates in Ace Payroll

When you pay annual leave Ace Payroll provides a list of the three pay rate calculations required by section 21.

To open this window from the front screen, click Calculate Pays Leave Holiday Pay Next

Press the report icon next to any of the pay rates to produce a detailed report of the calculation.

Annual Average

This the is the employee's average weekly earnings for the 12 months up to the end of the last pay period before the annual holiday.

Four Week Average

This is the employee's average earnings over the last four weeks.

Current Usual

If you have entered a standard pay for the employee, then it is shown here.

 

Daily rate

Ace Payroll automatically calculates daily payment rates for leave.  All you need to do is confirm the rate.

After you have entered the days your employee has taken or will be taking as annual leave, click the Confirm Daily Rate button to open the Confirm Daily Rate window.

Click Go to accept the suggested daily rate, or enter a different value manually.    

Be aware that the suggested pay rate is the legally required minimum pay rate.

 

  FAQs


I'm using the Annual Leave method, why is no current usual daily rate shown?

For salaried staff, the Current Usual Daily Rate is the salary each pay period divided by the number of days worked each pay period.

For hourly employees, the Current Usual Daily Rate is calculated based on the usual number of hours the employee works each pay period. If you do not have a usual number of hours entered, Ace Payroll cannot calculate a Current Usual Daily Rate.

To load Usual Hours for an employee, start at the front screen and click Calculate Pays then choose an employee. Enter hours in the Usual Units column which is on the right side of the Pay Calculation window.
The amount you enter becomes the default value for every period, but you can set it to a different amount at any point.