Annual Leave Liability Calculator NZ 2026

This calculator values the annual leave your team has earned and not yet taken, which is a real liability rather than a notional one because it will be paid either as time off or as cash in someone's final pay. You enter the number of staff, the average weeks of leave outstanding for each of them, the average weekly rate that leave should be valued at, and your employer on-costs, and it returns the total provision, the on-costs riding on it, the cost per week of leave, and what a pay rise would add. Two things about this figure catch people out. The first is that leave is valued at the rate in force when it is taken, not the rate that applied when it was earned, so every pay round revalues the entire outstanding balance upwards. A business carrying a lot of banked leave therefore takes a larger hit from a three percent pay rise than the salary line alone suggests, and this calculator shows that second number explicitly. The second is the rate itself. Accrued leave should be valued at the greater of ordinary weekly pay and average weekly earnings, the same test that applies when the leave is taken, so valuing the provision at base salary understates it for anyone earning regular overtime, commission or allowances. It is built for owners, finance managers and anyone preparing accounts who wants the leave provision to be defensible rather than a guess.

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$40,626
annual leave liability, including employer on-costs
Leave pay$39,000
On-costs$1,626
Weeks outstanding30
A 3% rise adds$1,219

Leave is valued at the rate in force when it is taken, so a pay rise revalues the whole outstanding balance, not just future accrual. Value the provision at the greater of ordinary weekly pay and average weekly earnings, which is the same test that applies when the leave is actually paid.

How it works

Total weeks outstanding are the number of staff multiplied by the average weeks each has banked. The leave pay figure values those weeks at the average weekly rate you enter. Employer KiwiSaver and the ACC work levy are then added, because leave is gross earnings when it is paid and carries the same on-costs as ordinary pay. The pay rise line applies your percentage to the whole provision rather than to future accrual only, because the outstanding balance will be paid at whatever rate applies on the day it is taken. That is the number worth carrying into a pay round discussion: it is a one-off revaluation of a liability you already have, on top of the ongoing salary cost of the rise itself.

Worked example

A business has twelve staff carrying an average of 2.5 weeks of untaken leave each, which is 30 weeks in total, valued at an average of $1,300 a week. The leave pay itself is $39,000. Employer KiwiSaver at 3.5 percent and an ACC work levy of 0.67 percent add about $1,626, so the liability sitting on the balance sheet is roughly $40,626. If the business grants a 3 percent pay rise, the outstanding balance is revalued at the new rate, which adds about $1,219 to the provision immediately. That is separate from, and on top of, the ongoing cost of paying everyone 3 percent more.

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Data sources: the entitlement and valuation rules on this page are maintained against Employment New Zealand. Not accounting advice. Figures are checked twice monthly.

Frequently asked questions

Why does a pay rise increase the annual leave liability?

Because leave is valued at the rate in force when it is taken, not the rate that applied when it was earned. Someone who banked four weeks two years ago will be paid for those weeks at today's rate. So every pay rise revalues the entire outstanding balance upwards, and a business carrying a lot of untaken leave takes a larger hit from a pay round than the salary increase alone suggests.

Does annual leave have to be paid out when someone leaves?

Yes. Any annual holidays an employee has become entitled to and not taken must be paid out in their final pay, along with 8 percent of gross earnings since their last entitlement date for the part-year they have accrued but not yet become entitled to. That is why accrued leave is a genuine liability rather than a notional one: it will be paid, either as time off or as cash.

What rate should accrued leave be valued at?

At the greater of ordinary weekly pay and average weekly earnings, the same test that applies when the leave is actually taken. Valuing a provision at base salary alone understates it for anyone who earns regular overtime, commission or allowances, in exactly the same way that paying holiday pay at base salary alone underpays them.