Free Holiday Pay Calculator for New Zealanders
Annual leave in NZ is paid as the greater of Ordinary Weekly Pay or Average Weekly Earnings. This estimator covers the standard accrued-weeks method and the 8% pay-as-you-go method for fixed-term workers.
Your holiday pay
Based on a $65,000 salary and 4 weeks accrued.
About our Holiday Pay Calculator
NZ’s Holidays Act 2003 says holiday pay is whichever is higher: Ordinary Weekly PayOrdinary weekly payRegular weekly pay excluding one-offs; one of two figures that set holiday pay.View in glossary → (your regular pay for a typical week) or Average Weekly EarningsAverage weekly earnings (AWE)Average weekly pay over the past 12 months; sets holiday pay if higher than ordinary weekly pay.View in glossary → (gross earnings over the past 12 months, divided by 52). The two figures match for salaried workers with no irregular earnings; they diverge for anyone on commission, irregular shift premiums, or recurring overtime.
For a salaried worker on $52,000 with no extras, OWP is $1,000 a week and AWE is also $1,000 a week. Four weeks of accrued leave pays out at $4,000 gross, with PAYE applied through the normal pay run. For the same worker with $5,000 of bonus and overtime over the year, AWE rises to about $1,096 a week, and the four-week accrued leave pays $4,384 gross because AWE is the higher of the two.
The calculator handles both the standard method (used by permanent employees) and the 8% pay-as-you-go method (used by fixed-term and casual workers). Toggle the method to see the difference; for the same gross pay, both produce the same total holiday pay over a year, but the cash-flow timing differs.
How to use it
Enter your annual gross salary, the number of weeks of accrued leave you intend to take, and any irregular extras (commission, recurring overtime, bonuses) that lift your past-year earnings above your salary alone.
The result panel returns gross holiday pay, the PAYE deducted, the ACC earner levy on the pay, and net holiday pay deposited to your account. For a one-off accrued lump-sum payout (final pay, redundancy), use the higher PAYE figure that the lump-sum method produces.
For workers under the 8% PAYG method, switch the toggle and enter your annual gross. The calculator returns the per-pay-run holiday pay that should already be appearing on each weekly or fortnightly pay slip.
Why use it
Holiday pay errors are the most common payroll mistake in NZ. The OWP/AWE comparison sounds simple but in practice many payroll systems default to OWP and ignore the AWE check, which short-pays workers whose past-year earnings included irregular extras. The calculator surfaces both figures so you can verify the right one is being used.
The 8% PAYG method has its own pitfalls. Some employers apply it to permanent workers (which is unlawful under the Holidays Act). Some apply it correctly to fixed-term workers but forget to roll into accrual once the contract becomes permanent. The calculator’s "method" toggle helps spot which case applies to your situation.
For final-pay calculations on resignation, the calculator’s gross figure is the starting point. The lump-sum PAYE method (covered in the bonus calculator) typically produces a higher PAYE on a final-pay accrued leave payout than ordinary in-the-pay-run PAYE, because the lump sum lands as additional income on top of the running annualised figure.
The maths behind it
Holiday pay = max(Ordinary Weekly Pay, Average Weekly Earnings) × weeks accrued NZ’s Holidays Act 2003 requires holiday pay at the higher of two figures: Ordinary Weekly Pay (the regular pay for a typical week) and Average Weekly Earnings (gross earnings over the past 12 months divided by 52). The calculator works in OWP terms by default and lets you check against AWE if commission, overtime, or shift allowances make the past year’s average higher than ordinary pay. PAYE on holiday pay uses the standard PAYE method when paid as part of regular pay, or the lump-sum method when paid out as a single accrued sum.
Worked example
Mahalia, customer service rep in Whanganui, taking 4 weeks of accrued leave on a $52,000 salary.
Mahalia’s ordinary weekly pay (OWP) is $1,000 ($52,000 ÷ 52). Over the past 12 months her average weekly earnings (AWE), including a small Christmas bonus and three weeks of paid sick leave, work out to $1,015.
AWE is higher, so AWE applies. Gross holiday pay for 4 weeks: $1,015 × 4 = $4,060.
PAYE applies at her ordinary rate (since the pay run remains regular, not a lump-sum payout). On $4,060 of additional taxable income spread across the 4-week period, PAYE is roughly $750 and ACC is $71, leaving net holiday pay of around $3,239.
If Mahalia were a casual or fixed-term worker on the 8% pay-as-you-go method, holiday pay would have been $1,000 × 0.08 = $80 added to each weekly pay run instead of accruing as 4 weeks.
Things to keep in mind
- OWP vs AWE depends on your pay pattern. For workers on a flat salary with no commission or overtime, OWP and AWE are identical. The two diverge when irregular earnings sit on top of the salary: a Christmas bonus, large overtime in some weeks, or commission swings between months. Always run both numbers and use the higher one.
- Annual leave accrues at 4 weeks per year. NZ’s minimum is 4 weeks of paid annual leave after 12 months of continuous employment, on top of public holidays. Some employers offer a fifth week as a benefit, particularly in professional and senior roles.
- Public holidays are separate. Public holiday payPublic holidayStatutory day off (ANZAC, Christmas, etc.); workers get time-and-a-half plus a day in lieu.View in glossary → is paid at time-and-a-half plus a day in lieu when worked. The 11 NZ public holidays are paid at OWP for the day, regardless of whether worked. The calculator focuses on annual leave; the public holiday calculator handles public-holiday-specific maths.
- PAYG holiday pay applies to fixed-term and casual. Workers on fixed-term contracts of less than 12 months and "true" casual workers can be paid holiday pay as 8% on each pay runPAYG holiday payHoliday pay paid out as 8% of gross earnings each pay run, instead of accruing leave.View in glossary → ("pay as you go"), instead of accruing leave. Permanent employees receive accrued leave that’s paid at OWP or AWE when taken.
- Holidays Act review and reforms. The Holidays Act 2003 has long been criticised for complexity, particularly for shift workers and those with variable hours. A 2024 review proposed reforms but no replacement Act has yet passed. The current calculation rules apply until any new Act takes effect.
NZ-specific notes
FAQs
Why are holiday pay calculations so confusing in NZ?
The Holidays Act 2003 prescribes calculations that work cleanly for full-time salaried workers but produce edge cases for shift workers, commission earners, and casual employees. The OWP-vs-AWE comparison was designed to ensure no worker was disadvantaged by the calculation, but it puts a significant onus on employers to track both figures.
Should my pay slip show holiday pay being accrued?
Most NZ payroll systems show accrued annual leave as a balance in days or weeks, with a dollar value attached based on current OWP. The dollar value moves whenever your salary changes; the days/weeks balance is what determines how much leave you can take.
What does "8% pay-as-you-go" actually mean?
8% of gross earnings is added to each pay run as holiday pay, instead of accruing as leave. The 8% reflects 4 weeks of annual leave divided by 48 working weeks (approximately 8.33%, rounded down). Only fixed-term workers under 12 months and "true" casuals can be paid this way under the Holidays Act.
How is public holiday pay different?
Public holidays are paid at OWP for the day if you would have worked. If you actually work the public holiday, you are entitled to time-and-a-half plus a day in lieu. The 11 NZ public holidays sit on top of the 4 weeks of annual leave entitlement.
What happens to unused leave when I leave a job?
Accrued annual leave (already vested, after 12 months of employment) is paid out as part of the final pay at OWP or AWE, whichever is higher. Holiday pay accruing toward future entitlement (8% of earnings during the partial year before the next anniversary) is also paid out, calculated at 8% of gross earnings since the last anniversary.
Can I "cash up" leave instead of taking it?
Yes, but only one of your four weeks per anniversary year can be cashed up, and only at the employee’s written request. The cash-up payment uses the same OWP/AWE-greater-of method as taking the leave.
Does the calculator cover sick leave or bereavement leave?
No, this calculator focuses on annual holidays. Sick leave (10 days per year), bereavement leave (3 days for close family), and family violence leave (10 days per year) are separate entitlements with their own calculations. The annual leave calculator covers the OWP/AWE main case.
References & sources
- Employment NZ, "Calculating payments for leave and holidays". employment.govt.nz
- Employment NZ, "Cashing up annual holidays". employment.govt.nz
- Inland Revenue, "Extra pays and lump sums (PAYE on accrued leave payouts)". ird.govt.nz
- Ministry of Business, Innovation and Employment, "Employment legislation reviews (Holidays Act)". mbie.govt.nz