Employees get their annual holiday entitlements on their first anniversary (ie 12 months after starting work) and subsequent anniversaries after starting work with that employer. The date for entitlement may be changed when:
- the business has an annual closedown period and an employee has worked for less than 12 months
- an employee takes unpaid leave of more than a week during the year.
Some employment agreements provide for one or more ‘additional’ weeks of holidays on top of the statutory entitlement.
Annual holidays can be taken at any time agreed between the employer and the employee. Employees must be given the opportunity to take at least two of the four weeks holidays continuously.
Permanent employees with a constant work pattern
Annual holidays are simple to work out for employees who work set hours and days each week. On each anniversary of the start date of employment, the employee is entitled to four weeks of paid annual holidays. For example, an employee who works three days per week will become entitled to 12 days annual holidays after 12 months continuous employment (three days per week, 3 x 4 = 12).
Permanent employees with a work pattern that varies from week to week
What a week’s annual holiday looks like in terms of time off work should be determined at the point the holiday is taken. If the employee’s work pattern is predictable (as in a roster pattern that doesn’t change eg four days on, four days off), a ‘week’ will depend on which days the employee would have been working in the week in which they want to take annual holidays.
If the employee’s work pattern is clearly unpredictable, then a ‘week’ could be determined using an average number of days/hours per week over a suitable number of weeks prior to the leave being taken.
The employer and employee can agree on how the entitlement to annual holidays is to be met, but it must be based on what genuinely constitutes a working week for the employee. If agreement can’t be reached either party can contact us for help.
Genuinely casual employees (those who work intermittently, with no expectation of ongoing employment) and some fixed-term employees can agree to receive holiday pay on a ‘paid-as-you-earn basis’ if certain conditions are met.
Casual, fixed-term or changing work patterns has more information about annual holiday entitlements.
General information about annual holidays
If an employee takes more than a week of unpaid leave during a year, the employer:
- can extend the time required before the employee becomes entitled to annual holidays by the amount of unpaid leave taken in excess of one week. For example, if an employee takes two weeks’ unpaid leave, they become entitled to annual holidays one week after the anniversary of their starting date of employment, or
- can agree with the employee that their average weekly earnings calculation will be modified to reflect the number of whole or part weeks greater than one week that the employee was on unpaid leave. For example, if an employee takes two weeks unpaid leave during the year, it can be agreed that the annual holiday pay is calculated on the basis of a 51-week year.
- can agree with the employee taking the unpaid leave will have no effect on the employee’s annual holiday entitlement.
Time off without pay while an employee is receiving ACC, on parental leave or leave for protected voluntary military service doesn’t affect the anniversary date for annual holiday purposes.
Leave without pay has more information.
Employees are entitled to receive their pay for annual holidays before the holiday starts, unless the employer and employee agree that the normal pay cycle will continue undisturbed by the time off work.
If an agreement is reached to pay the employee any annual holiday pay in their normal pay cycle, it’s advisable to record it either as part of the employment agreement or in writing on a case by case basis.
Annual holidays don’t expire if you don’t take them; they stay until the employee takes the holiday or their employment ends.
When an employee leaves their job any entitled annual holidays they haven’t taken (and annual holidays which are accruing but aren’t entitled yet), are paid out at 8% of their gross earnings, less any holiday pay already received.
Read more about calculating leave and holidays in final pay.
Employers can require employees to take annual holidays during a closedown period (as can happen over Christmas/New Year), providing they give at least 14 days’ notice.
If their employer agrees, an employee may take annual holidays in advance (ie before their 12 month anniversary of the date they started employment).
If an employee takes an annual holiday in advance, they get paid the greater of either their ordinary weekly pay at the beginning of the annual holiday, or their average weekly earnings (for the 12 months just before the end of the last pay period before the annual holiday, or the total time they worked for the employer ending at the last pay period before the annual holiday, if the employee has worked for less than 12 months).
Jiao has worked for her employer TJ’s Tyres for 24 weeks. Her employer agrees she can take one week’s annual holiday in advance so she can attend a family wedding. When she takes the holiday, Jiao will be paid her total gross pay for the whole time she has been working at TJ’s divided by 24 (the number of weeks she has worked).
When an employer agrees to let the employee take annual holidays in advance, they should make sure that the employee agrees in writing that the employer can deduct the amount of any overpayment of holiday pay from any final pay. The employer won’t be able to recover the money if the employee leaves before they become entitled to the leave.
Employers can make employees take annual holidays if:
- they can’t reach agreement with their employee about when annual holidays will be taken, and they give the employee at least 14 days' notice. This only applies to annual holidays that the employee is entitled to, or
- they regularly close down for a certain period every year and give the employee at least 14 days’ notice.
If an employee closes the workplace unexpectedly (eg if there was a sudden closure of the workplace following a natural disaster) and an employee refuses to take annual holidays with less than 14 days' notice and is prepared to come into work, they can’t be forced to take annual holidays.
People will have important and legitimate personal, family and community responsibilities. If an employee wants to take entitled annual holidays, employers can’t unreasonably refuse. An employer can refuse an employee’s request to take annual holidays that have accrued but they’re not entitled to yet.
If an employee is about to take annual holidays and before they go on leave, they (or their spouse, partner or dependant) become sick or they suffer a bereavement, their employer must let them take sick leave or bereavement leave for the relevant period (if they are entitled to leave).
If an employee is already taking annual holidays and:
- they (or their spouse, partner or dependant) become sick, the employee can take sick leave instead of annual holidays for the relevant period, but only if the employer agrees
- they suffer a bereavement, the employer must let them take bereavement leave instead of annual holidays for the relevant period.
If an employee is taking annual holidays and a public holiday falls on a day when they’re on holiday, it’s treated as a public holiday not a part of the employee’s annual holidays.
Public holidays falling soon after the end of an employee’s employment
If an employee’s employment ends and they have some remaining entitled annual holidays then on the basis that:
- they could have taken the rest of their annual holidays right at the end of their employment, and
- during this potential timeframe for taking annual holidays time a public holiday falls on a day that would have been an otherwise working day (had they not left their employment), then they would be entitled to be paid for the public holiday that fell after their employment ended.
An employee's time on parental leave is included as continuous service and taking parental leave does not affect entitlement to annual holidays. Employees who take parental leave will accrue annual holidays and be entitled to a minimum of four weeks of annual holidays on the anniversary of their employment start date.
Calculating payments for leave and holidays has information on the impact of parental leave on payment for annual holidays.