Final Pay When You Leave a Job
👋 The Last Payment From an Employer
When you leave a job, whether you resign, are made redundant, or are dismissed, your employer must pay you a final pay. It is more than just your last normal wages. It also includes any leave you have earned but not taken, and it is calculated under the Holidays Act. Final pay is one of the most common places for payroll errors, so it pays to understand what should be in it.
What Final Pay Typically Includes
- Wages or salary up to and including your last day worked.
- Payment for annual leave you have earned but not taken.
- Any leave entitlement that arose on an anniversary you reached.
- Other amounts owed, such as outstanding allowances or agreed bonuses.
🌴 How Unused Annual Leave Is Paid Out
The biggest extra in most final pays is unused annual leave. Any annual leave you were entitled to but had not taken is paid out, and the calculation can be more involved than people expect, because it follows the Holidays Act rules rather than a simple hourly figure.
Two Parts to the Leave Payout
Leave that you had already become entitled to (from a past anniversary) and leave that has been building since your last anniversary are treated slightly differently in the calculation, but both should be paid. The result reflects your earnings, so people with variable pay should see that reflected, not just a base rate.
✄ Deductions and Tax
What Can Be Deducted
An employer can only make deductions from your final pay that are required by law, or that you have agreed to in writing, or that are specifically allowed in your employment agreement. They cannot simply take money for things like till shortages or breakages without a lawful basis and, usually, your agreement.
| Common deduction | Allowed? |
|---|---|
| PAYE tax, student loan, KiwiSaver | Yes, required by law where they apply |
| Leave taken in advance | Often yes, where agreed |
| An agreed amount you owe (in writing) | Yes, with proper agreement |
| Random charges with no agreement | No |
Tax on Final Pay
Final pay is taxable like normal pay. A lump sum of leave can sometimes push you into a higher tax slice for that pay period, and lump-sum payments such as some redundancy or bonus amounts have their own tax treatment. The end-of-year tax process squares this up, so an unusually large final pay does not always mean the tax was wrong.
💡 Checking Your Final Pay
A Simple Check
If Something Looks Wrong
Raise it with your employer first, in writing, setting out what you think is missing. Many final-pay problems are genuine payroll mistakes that are fixed once pointed out. If it is not resolved, free help is available, and Employment New Zealand publishes the rules and a process for unpaid entitlements.
Tools and Timing
Final pay is normally paid in the pay cycle covering your last day, unless your employment agreement sets a different time. Estimate the pieces with our Final Pay Calculator, the Holiday Pay Calculator, and the Take-Home Pay Calculator for the after-tax figure.
Final word: your final pay is wages to your last day plus unused annual leave, minus only lawful or agreed deductions, taxed like normal pay. Check each part, because this is where underpayments most often hide. This is general information, not legal advice.
🎯 Test Your Knowledge
Quiz on Final Pay When You Leave a Job (20 Questions)