Garden Leave Cost Calculator NZ 2026
This calculator works out what garden leave costs, which is the arrangement where someone who has resigned or been given notice is paid for their notice period but told not to come in. They remain employed throughout, and that is the entire point of it: they stay bound by their duties of good faith and confidentiality, and they cannot start with a competitor until the notice period runs out. What it costs is notice paid with no work coming back the other way, plus covering the role, plus the on-costs that ride on both, plus the annual leave that keeps accruing because the person is still an employee. That last piece is the one most estimates miss, and on a three month notice period it is not small. Before using any of these numbers, check the employment agreement. In New Zealand an employer can generally only require garden leave where the agreement provides for it or the employee agrees, because employees are ordinarily entitled to do the work they are employed to do, and imposing it without a clause can itself amount to a breach. That check belongs before the decision rather than after it. Where the clause does exist, the calculation here gives you the honest number to weigh against the reason for doing it, which is usually protecting client relationships or confidential information for the length of the notice rather than saving money. It is built for owners, managers and HR people costing an exit.
Annual leave keeps accruing because the person is still employed, and any untaken balance is paid out in their final pay. Check the employment agreement first: garden leave generally requires a clause or the employee's agreement.
How it works
Notice paid is the annual salary converted to a weekly figure and multiplied by the notice weeks, with no work coming back for it. Cover is your weekly cover cost across the same period, because the role still has to be done by somebody. Employer KiwiSaver and the ACC work levy apply to both, since the person on garden leave is still an employee and the cover is one too. Leave still accruing takes the annual leave weeks earned across the notice period, values them at the person's weekly rate, and adds them, because the balance is paid out in their final pay whether or not they ever came back to the office. The total is what the decision costs, and it is deliberately shown against a decision that is usually made for protective reasons rather than financial ones.
Worked example
Someone on $120,000 has an eight week notice period and is placed on garden leave. Their weekly rate is about $2,308, so eight weeks of unworked notice costs about $18,462. Covering the role at $1,600 a week adds $12,800. Employer KiwiSaver at 3.5 percent and an ACC work levy of 0.67 percent apply to both and add about $1,304. Across eight weeks they also accrue roughly 0.62 weeks of annual leave, worth about $1,420, which will be paid out in their final pay. The garden leave therefore costs about $33,985 in total, against $18,462 if you had simply thought of it as paying out the notice.
Related calculators
- Notice Period: how long the notice actually is.
- Final Pay: what is owed when they leave.
- Annual Leave Liability: the balance being paid out.
- Employee Turnover Cost: the full cost of the departure.
- NZ Wage Subsidy Eligibility Checker 2026: flexi-Wage and Mana in Mahi.
- Absenteeism Cost Calculator NZ 2026/27: price a Team's Absence.