Annual leave is paid time off work that employees in New Zealand build up over the year. It is a legal entitlement, not a favour from your employer, and it is set out in the Holidays Act. Understanding how it works helps you check your payslip, plan time off, and make sure you are paid correctly, especially when you leave a job.
Annual leave applies to employees, whether full-time, part-time, fixed-term, or casual, though how it is provided can differ. Genuine contractors are not employees and do not get annual leave, which is one reason the employee-versus-contractor distinction matters so much.
For most employees, the full annual leave entitlement becomes available after each twelve months of continuous employment. Before that first anniversary, you are still building toward it, and many employers let you take leave in advance by agreement.
Although the legal entitlement arrives at each anniversary, payslips often show leave accruing gradually through the year so you can see roughly how much you have earned. The amount of leave is measured in weeks, which matters for people who work irregular or changing hours, because a week of leave should reflect what a normal working week looks like for you.
When you take annual leave, you are paid for it. The Holidays Act sets out that annual leave is paid at the greater of two figures, which protects employees whose earnings vary.
| Comparison | What it means |
|---|---|
| Ordinary weekly pay | What you would normally earn in a week at the time you take leave |
| Average weekly earnings | Your average weekly earnings over the past year, including things like regular overtime and commission |
You are paid the higher of the two. This means if you regularly earn extra through overtime, commission, or bonuses, your holiday pay should reflect that, not just your base rate.
For genuinely casual or some fixed-term employees, holiday pay can be paid as a percentage added to each pay, commonly shown as a pay-as-you-go holiday pay line, rather than building up leave to take later. This should be clearly stated and shown separately on your payslip.
Leave is taken by agreement between you and your employer. Your employer cannot unreasonably refuse a request, and they can require you to take leave with reasonable notice, for example during a Christmas closedown. You can also ask to cash up a portion of leave in some circumstances, though keeping leave for genuine rest is usually the healthier choice.
When your employment ends, any annual leave you have earned but not taken must be paid out in your final pay. This is one of the most common places payroll errors and underpayments show up, so it is worth checking.
Employment New Zealand publishes the official rules and a free service to check entitlements, and the Holidays Act sets the legal minimums. If you think you have been underpaid, raise it with your employer first, then seek help if it is not resolved.
Estimate your leave with the Annual Leave Calculator and your holiday pay with the Holiday Pay Calculator. Final word: annual leave is a legal entitlement measured in weeks, paid at the greater of your ordinary or average earnings, and paid out if unused when you leave. Knowing this helps you spot errors and rest without losing out. This is general information, not legal advice; always check the current rules.
Quiz on Annual Leave (20 Questions)
Employees are entitled to at least four weeks of paid annual leave a year after 12 months of continuous employment.
At the greater of your ordinary weekly pay or your average weekly earnings, so it reflects your normal income.
Any unused annual leave is paid out in your final pay, along with other entitlements owed.
You can ask to cash up to one week of annual leave a year, with your employer agreement, once the entitlement has accrued.
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