Holidays Act compliance check: how to tell if your payroll is right

You can only know by testing the calculations against the Act, employee by employee. Payroll software does what it was set up to do, and the most common errors are set-up choices that look reasonable, such as paying leave at the base rate.

Start with the five-point self-check above. If any answer is “no” or “not sure”, a full Holidays Act review is worth doing.

Check the payroll set-up against the Act once, then test the output regularly: leave payments, public holidays and final pays. Keep the records the Act requires, including hours worked each day, and check again whenever your payroll system, pay structure or employment agreements change.

Until the Employment Leave Act 2026 takes over on 6 August 2028, the Holidays Act 2003 sets them: four weeks of annual holidays after each 12 months, paid public holidays on days the employee would otherwise work, ten days of sick leave a year after six months, bereavement and family violence leave, and how each one is paid. Minimum wage, KiwiSaver and PAYE rules sit in other Acts.

The Labour Inspectorate and remediation projects keep finding the same ones:

Compare your payslips with the rules: annual holidays at the greater of your ordinary weekly pay and your average weekly earnings over the last 12 months; public holidays paid if you would normally have worked that day; time and a half if you worked one; and a day in lieu as well if it was a day you would normally work. Employment New Zealand can help if you think you have been underpaid.

A review takes your payroll export with at least 12 months of history before the earliest leave being checked, so average weekly earnings can be worked out, and tests every employee against each rule: gross earnings, annual holiday pay, public holidays, alternative holidays, sick and bereavement leave, 8% pay-as-you-go, final pays and record keeping.

Each finding should show the inputs, the calculation and the section of the Act it rests on, with the amount owed for each employee and period.

Large traditional remediation projects have run for a year or more. Our engine checks every pay line in minutes, and the two of us review and sign the findings within days. “Days, not months” is our own target, not a study result.

Remediation means recalculating what each current and former employee should have been paid under the Holidays Act, paying the difference, and fixing the payroll so the error stops. Health NZ’s remediation has paid more than $1 billion; most are far smaller, but the method is the same.

Claims for unpaid holiday and leave pay are generally limited to six years, under the Employment Relations Act 2000. The Employment Leave Act 2026 also sets up an optional remediation process for settling Holidays Act liabilities.

A breach of the main holiday and leave provisions can attract a penalty of up to $10,000 for an individual and $20,000 for a company, per breach, on top of the arrears owed.

Yes. The Holidays Act applies until each employee’s first pay period on or after 6 August 2028, liabilities under it survive repeal, and any error in today’s balances carries into the new hours-based balances at the switch.