What types of leave are my employees entitled to in New Zealand?

Many employers are cautious about ensuring workplace benefits and employee entitlements are not misused or abused by their employees. According to the Wellness in the Workplace Survey in 2017 conducted by the Southern Cross Health Society and BusinessNZ, an absent employee typically costs their employer NZD 600 to NZD 1,000 a year.

While the cost of an absent employee is a valid concern for employers, there is a good case for providing your employees adequate time to rest and recharge as studies have shown that wellness has a significant impact on productivity.

An employer that fails to give its employees its minimum leave entitlements  in NZ may also face harsh penalties. For companies who flout the rules, the penalty is the greater of NZD 100,000 or three times the amount of the financial gain made by the company. So it’s better to know about types of leave  in NZ.

Also Read about : Importance and the purpose of employment contract.

Note:  As an Business owner and employer you also need to know about : Pain points that might kill your business, Grants New Zealand government provides for start up.

Source: Employment New Zealand

All employees are entitled to the following categories of holidays or leaves:

• 4 weeks of annual leave for rest and recreation;
• 11 public holidays per year;
• Access to sick leave and bereavement leave upon fulfilling certain conditions.

Annual leave

According to the New Zealand Holidays Act 2003, all types of employees in New Zealand are entitled to annual holidays after they have worked for their employer for at least 12 months continuously. For your permanent, full-time employees, the annual holiday entitlement is 4 weeks of paid annual holidays. You should collect information and aware about those things before signing contract for a job.

For permanent but part-time employees with a constant work pattern, just calculate the quantity of annual holidays they are entitled to accordingly. For example, an employee who works 2 days per week is entitled to 8 days of annual holidays after 12 months of continuous employment. As for permanent employees with a work pattern that is unpredictable, a ‘week’ could be determined using an average number of days or hours per week over a suitable number of weeks prior to the leave being taken.

Where an employee is employed on a fixed-term agreement of less than 12 months, the employee can be paid annual holiday pay with their salary (i.e. on a paid-as-you-earn basis). This also applies to casual employees whose employment patterns are so intermittent or irregular that it is not practicable to provide 4 weeks paid annual holidays. Employees who are paid on a paid-as-you-earn basis do not get specific time off for their annual holidays.

If your employee has taken more than a week of unpaid leave during a 12-month period, as an employer you can extend the time required before your employee becomes leave entitled to annual holidays by the amount of unpaid leave taken in excess of one week.

Payment for annual holidays is at the rate of the greater of:

• The ordinary weekly pay at the time the holiday is taken or
• The employee’s average weekly earnings over the 12-month period before the annual holiday is taken.

Public holidays

Employees are entitled to a paid day off on a public holiday if it is a day they would have normally worked on.

If your employee works on a public holiday which falls on a day they would have otherwise worked on, they are entitled to an alternative holiday day, also known as a lieu day or day off en lieu. If the alternative holiday is not taken within 12 months, both you and your employee can agree for the alternative holiday to be paid out. 

Sick leave

Sick leave is another type of leave  in NZ. An employee is entitled to 5 paid days of sick leave per year to allow them to care for themselves or their dependents, as long as they have met the following criteria:

• they have 6 months current continuous employment with the same employer; or
• they have worked for the employer for 6 months for:
  • an average of 10 hours per week, and
  • at least 1 hour in every week or 40 hours in every month.

Any unused sick leave at the end of a 12-month period can be carried over and added to the next year’s leave entitlements.

Bereavement leave

An employee may take bereavement leave if someone close to them dies, as long as they have met the following criteria:

• they have 6 months current continuous employment with the same employer; or
• they have worked for the employer for 6 months for:
  • an average of 10 hours per week, and
  • at least 1 hour in every week or 40 hours in every month.

Payment for bereavement leave should be made if the employee would have otherwise worked on the day and calculated based on the employee’s relevant daily pay.

Parental leave

Employees may be able to take parental leave to care for their new child if they meet either the 6- or 12-month criteria.

To determine whether your employee qualifies for parental leave, check out the Parental Leave and Payment Eligibility table by Employment New Zealand.

Other Types of leave  in NZ.

Other than the types of leave mentioned above, an employee may wish to take various other kinds of leave, such as:

• Stress leave
• Garden leave
• Defence force volunteers
• Leave without pay
• Election voting leave
• Employment during and after disasters
• Long service leave

Learn more about the other kinds of leave.

Can I vary the arrangement with my employee in the Employment Contract?

While the Holidays Act sets out the minimum holiday and leave that an employee is entitled to different types of leave  in NZ, employers and employees do have the option to vary these arrangements in the Employment Contract that they sign, as long as it is allowed for under the Act.

Some variations that may be made by agreement include the following:

• Transferring a public holiday by agreement: An employer and employee may agree that a public holiday will be observed on another day for the employee. This could be provided for in the Employment Contract or a separate agreement in writing.
• Provisions for holiday and leave entitlements that are better than the minimum rights in the Holidays Act: If your company prides itself on its flexible workplace culture and emphasis on employee welfare, providing better terms than the minimum entitlements is a great way to demonstrate this.

However, take note that there are some employment terms that may not be varied by an Employment Contract or other kinds of agreements. The Holidays Act contains the minimum entitlement for each type of holiday and leave. Each entitlement is a separate category and cannot be “traded off” on a package basis. For instance, an employer and employee cannot agree that the employee will give up his right to extra pay on a public holiday in exchange for an extra week of annual holidays.

For more comprehensive information to leave and holidays, check out the leave and holidays guide by Employment New Zealand.

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