In New Zealand, annual leave is a key part of employee entitlements under the Holidays Act 2003. It is designed to give employees paid time off for rest and relaxation. But sometimes it can feel like you need a holiday just from trying to understand what your entitlement to annual leave is and how you can use it.
Entitlement to Annual Leave
All permanent employees (full-time or part-time) are entitled to annual leave after completing 12 months of continuous employment. Casual employees may also receive annual leave in some circumstances, typically paid as an additional amount on top of their wages.
After 12 months of continuous employment, employees are entitled to at least four weeks of paid annual leave. This leave accrues annually on each employee's anniversary date of starting employment.
Part-time employees are entitled to the same four weeks of leave, but this is calculated based on the hours they normally work. For instance, if an employee works 20 hours per week, they will be entitled to four weeks of leave at 20 hours per week.
Using Annual Leave
Once the 12-month entitlement kicks in, you can generally take annual leave by agreement with your employer. You can request specific dates for leave, but the employer has the right to approve or decline your request based on business needs. Employers must act reasonably when making these decisions.
Employees can request to take annual leave in advance of their entitlement accruing. However, this is subject to the employer's approval. If you leave the job before you've worked enough to cover the leave taken in advance, your employer can deduct the overpayment from your final pay.
Common questions relating to Leave Accrual and Carry-Over
Can leave be carried over?Yes, employees can carry over annual leave into the next year if they don’t use all of it. There is no limit to how much leave can be carried over unless agreed otherwise in the employment contract. However, it is a good idea to use your leave regularly to avoid burnout.
Can I cash out my annual leave?Employees can request to cash out up to one week of their annual leave per year, but this is only possible if the employer agrees. Employers cannot pressure employees to cash out their leave, and cashing out more than one week per year is not allowed under the Holidays Act.
Annual Leave During Special Circumstances
If an employee takes parental leave, their annual leave entitlement still accrues, but their leave will be paid at a reduced rate. It will be calculated based on their earnings over the 12 months preceding their parental leave (which may be zero if they weren’t paid during that period).
If you become ill or experience bereavement during annual leave, you can request to take that time as sick or bereavement leave instead of using your annual leave.
Termination of Employment
If you leave your job (whether due to resignation or dismissal), you are entitled to payment for any unused annual leave. The amount paid will be based on the same calculation (ordinary weekly pay or average weekly earnings) and included in your final pay.
When it comes to effectively using your annual leave, consider the following:
Plan your leave: Be proactive about requesting leave early, especially if you're planning for holidays during busy periods when leave requests are high.
Make sure your leave is approved: Be sure you follow whatever procedure your employer has in place to have leave approved - don’t rely on verbal agreements.
Know your rights: Be aware that your employer cannot unreasonably decline your leave request, but they do have the right to consider business needs.
Check your contract: Some employment agreements may include more favourable leave provisions, such as additional weeks of leave or specific rules about when leave must be taken.
Understanding these rights and obligations helps ensure that you get the rest you need while maintaining a good relationship with your employer. If you are concerned that your annual leave entitlements have got lost in transit, ask for clarification from your employer and if in doubt, get help from an expert. mathewswalker.co.nz | 0800 612 355
Disclaimer: The information provided in this blog is for general informational purposes only and should not be considered legal advice. While we strive to keep the information accurate and up to date, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained on the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific legal advice tailored to your situation, please contact a qualified legal professional.
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