Recovering Unpaid Wages and Holiday Pay
💵 When your pay is short
If your employer has underpaid you, has not paid your final pay, or has left out holiday pay, you have clear rights and a set process to recover what you are owed. In New Zealand you can generally claim wage and holiday pay arrears going back up to six years, so a problem that has built up over time is still worth acting on. The key is to move calmly and keep good records. This guide walks you through the first steps to take with your employer, the free help available through the Ministry of Business, Innovation and Employment (MBIE) and Employment New Zealand, the Labour Inspectorate that enforces minimum standards, and the mediation, Employment Relations Authority and Employment Court process if the problem is not sorted early. It also covers how final pay and holiday pay are worked out, the background to the Holidays Act remediation, and the penalties an employer can face. Money owed to you does not disappear just because time has passed, and raising it properly is usually far quicker and cheaper than most people expect.
Step one: raise it in writing
Start by telling your employer, in writing, what you think you have been underpaid and why. An email or a letter is fine. Be specific: give the pay periods, the hours or the amounts, and what you believe the correct figure should be. Keep it factual and polite. A written message does two things at once. It gives your employer a clear chance to fix an honest mistake, and it creates a dated record that you raised the issue. Many payroll errors, such as the wrong hourly rate, missed overtime, or holiday pay left off a final pay, are genuine slip-ups that get corrected in the next pay run.
Step two: gather your records
Good records make your case simple to prove. Pull together everything that shows what you were paid and what you actually worked:
- Payslips: these show your gross pay, deductions and net pay for each period
- Timesheets or rosters: proof of the hours and days you worked
- Your employment agreement: your agreed pay rate, hours and entitlements
- Bank statements: the amounts actually paid into your account
- Any messages: texts or emails about your hours, pay or leave
Employers are legally required to keep wage, time, and holiday and leave records for every employee, and to let you see your own records. If you ask for them, in writing, they must provide them. Missing or incomplete records often work in the employee's favour if a claim goes further.
What counts as being underpaid
Underpayment is not only being paid below the minimum wage. It also includes:
- Being paid less than your agreed rate in your employment agreement
- Not being paid for all the hours you worked, including trial shifts and unpaid overtime
- Missing or short holiday pay, annual leave, or public holiday pay
- A final pay that leaves out wages or holiday pay when you leave a job
- Unlawful deductions from your wages that you did not agree to in writing
Being underpaid is frustrating, but resigning on the spot or refusing to work can weaken your position and cost you income. Keep working if it is safe to do so, raise the issue in writing, and follow the steps below. Your right to recover arrears does not depend on you staying in the job, and it survives after you leave.
🛠️ Getting help and making a complaint
If raising the problem directly does not fix it, there is a free, structured path to follow. You do not need a lawyer to start, and most of the services below cost nothing.
The Labour Inspectorate
The Labour Inspectorate is part of MBIE and works alongside Employment New Zealand. It enforces New Zealand's minimum employment standards and can investigate breaches and take action against employers. It covers things like:
- Minimum wage and unpaid wages
- Holiday pay and leave entitlements under the Holidays Act 2003
- Unlawful deductions under the Wages Protection Act 1983
- Employers not keeping proper wage and time records
You can ask for help or make a complaint through the Employment New Zealand website at gethelp.employment.govt.nz, or by calling 0800 20 90 20. The Labour Inspectorate deals with minimum standards, so it will not settle a dispute about a pay rate above the minimum, or a personal grievance. Those go through mediation and the Authority instead.
The Inspectorate enforces the legal minimums. If your complaint is about being paid less than a rate you agreed that sits above the minimum wage, or about how you were treated, that is a contractual matter or a personal grievance. Free mediation is the usual next step for those.
Free mediation through MBIE
Employment Mediation Services, run by MBIE, is a free service for any employee or employer with an employment relationship problem. A neutral mediator helps both sides talk it through and try to reach an agreement. Mediation is:
- Free: there is no charge to use the service
- Confidential: what is said in mediation stays private
- Flexible: it can be in person, by phone or online
- Often quick: many problems are resolved in a single session
If you reach an agreement, a mediator can help record it in writing and it can be made binding, so both sides know it will be honoured. The Employment Relations Act 2000 encourages mediation as the first formal step for most employment problems.
The Employment Relations Authority
If mediation does not resolve the problem, either side can take it to the Employment Relations Authority. The Authority is an independent body that investigates the facts and makes a legally binding decision. It can order an employer to pay the wages and holiday pay you are owed, and it can impose penalties for breaches. It is less formal than a court, and you can represent yourself.
The Employment Court and beyond
The Employment Court sits above the Authority. It hears appeals from Authority decisions and some cases that are sent straight to it. Most wage recovery matters are resolved well before this stage, but the Court is there for complex or contested cases, and a further appeal on a point of law can go to higher courts.
The time limit to recover arrears
You can generally recover wage and holiday pay arrears going back up to six years. Holiday and leave pay is treated as wages under the Holidays Act 2003, so the same six-year window applies to unpaid holiday pay. Because the clock is limited, it pays to act rather than wait, but a long-running underpayment is still worth claiming even if it started years ago.
The six-year window is for recovering wage and holiday arrears. A personal grievance, for example about an unjustified dismissal, usually has to be raised with your employer within 90 days of the problem. If your situation involves both unpaid money and a grievance, get advice early so you do not miss the shorter deadline.
📄 Final pay, holiday pay and penalties
Unpaid final pay is one of the most common wage problems. When you leave a job, your final pay must include every dollar you have earned and not yet been paid.
What must be in your final pay
- Wages for all the hours you worked up to your last day
- All the holiday pay you are entitled to
- Any other payments owed, such as a bonus or a leaving amount in your agreement
Your final pay must be paid on or before the pay day of your final pay period. That pay day can fall after your last day at work, but your employer cannot simply hold the money back.
How holiday pay is calculated when you leave
How your annual holiday pay is worked out on leaving depends on how long you were employed:
If you leave before you reach your first anniversary, your annual holiday pay is 8% of your total gross earnings for the whole time you worked, minus any holiday pay you were already paid (for holidays taken in advance or paid on a pay-as-you-go basis).
If you have completed at least a year, you are paid out any unused annual holidays at the greater of your ordinary weekly pay or your average weekly earnings, plus 8% of your gross earnings since your last work anniversary (for the part-year that has not yet become an entitlement).
The 8% figure comes from the Holidays Act 2003: four weeks of annual holidays a year is roughly 8% of a year's pay, which is why 8% of gross earnings is used to value holiday pay that has not yet fallen due.
Minimum wage top-ups
From 1 April 2026 the adult minimum wage is $23.95 an hour. The starting-out and training minimum wage is $19.16 an hour. If you were paid below the rate that applied to you, you are owed the difference for every hour you worked. Minimum wage rates are before tax and before any lawful deductions, so the rate is measured on your gross pay.
| Minimum wage type (from 1 April 2026) | Rate per hour |
|---|---|
| Adult | $23.95 |
| Starting-out | $19.16 |
| Training | $19.16 |
The Holidays Act remediation background
For years, many large New Zealand employers, including government agencies, found that their payroll systems had not calculated holiday pay correctly under the Holidays Act 2003. The Act's rules on ordinary weekly pay and average weekly earnings are genuinely complex, and systems often defaulted to the wrong method. This led to a nationwide remediation effort, with employers going back through records and paying arrears to current and former staff. If you worked for a large employer in the last several years, it is worth checking whether you were part of a remediation payment, and whether the amount looks right for the hours and leave you took.
The government has signalled changes to simplify the Holidays Act. Until any new law takes effect, the current Holidays Act 2003 rules apply, including the 8% calculation for holiday pay on leaving. Always check the entitlement in force for the period you are claiming.
Penalties an employer can face
Failing to pay wages or holiday pay correctly is a breach of employment standards, and the consequences go beyond simply repaying the arrears. The Employment Relations Authority can order penalties on top of the money owed. The maximum penalty is up to $10,000 for an individual and up to $20,000 for a company for each breach. In serious or repeated cases, employers can also face banning orders that stop them employing staff, and part of any penalty can be awarded to the affected employee.
An employer who ignores an underpayment is not just risking the original arrears. Cases regularly result in the arrears being repaid in full, plus thousands of dollars in penalties for each breach. Raising the issue early and in writing gives an employer every chance to fix it before it reaches this point.
🔢 Worked examples
These examples use the 2026/27 rules and simple round numbers so you can follow the arithmetic. They are illustrations, not legal advice for your own situation.
Situation: Aroha worked casual hours at a cafe for seven months, then left. She never took any annual holidays, and her final pay left out her holiday pay. Her total gross earnings for the whole job were $28,000.
Calculating what she is owed:
What Aroha does: She emails her old employer, sets out the $2,240 and how she worked it out, and asks for it to be paid. When there is no reply, she lodges a request for help at gethelp.employment.govt.nz. Because she left less than six years ago, she is well inside the time limit to recover the arrears.
Situation: Tane was paid $22.00 an hour through the 2026/27 year, but the adult minimum wage from 1 April 2026 is $23.95 an hour. He worked 1,200 hours in that time. He was underpaid for every hour.
Calculating the shortfall:
What Tane does: Underpaying the minimum wage is a breach of a minimum standard, so this is exactly what the Labour Inspectorate handles. Tane raises it in writing first, then complains to the Inspectorate if it is not fixed. His holiday pay was also short, because 8% of a too-low wage is too little, so his top-up flows through to his holiday pay as well.
When your base rate is wrong, every figure built on it is wrong too: your gross pay, your 8% holiday pay, and any pay-as-you-go holiday loading. Fixing the base rate is what puts all of it right.
Situation: Mere regularly worked two extra hours a week that were never paid, at her agreed rate of $30 an hour. This went on for the last four years. She wants to know whether she can still claim it.
Calculating the arrears:
Why she can still claim: Wage arrears can generally be recovered for up to six years, so four years of unpaid overtime is inside the window. Her timesheets and rosters are the evidence that shows the extra hours. Because this is about hours she actually worked, it is a wages claim, and the arrears attract holiday pay on top.
Mere's claim is strong because she kept her rosters and timesheets. If you rely only on your employer's records, they can be incomplete. Save your own copies of hours worked as you go.
Situation: Wiremu worked full time for two years at $30 an hour, 40 hours a week, so his ordinary weekly pay is $1,200. When he left, he had three weeks of unused annual holidays from his last entitlement, and he had earned $30,000 gross since his most recent work anniversary.
Calculating his final holiday pay:
What Wiremu checks: With more than a year of service, his final pay is not just 8% of everything. It is his banked unused holidays paid at his weekly rate, plus 8% on the part-year he has worked since his anniversary. If his employer had only paid the 8% and skipped the banked three weeks, he would be short $3,600.
Sources
Rates, dates and rules in this guide were checked in July 2026 against official New Zealand government guidance:
- Employment New Zealand (MBIE), "Final pay" (final pay contents and timing, 8% of gross holiday pay for under 12 months, unused holidays plus 8% for 12 months or more), employment.govt.nz
- Employment New Zealand (MBIE), "Labour Inspectorate complaints" and "Mediation" (Labour Inspectorate role, gethelp.employment.govt.nz, 0800 20 90 20, free MBIE mediation, Employment Relations Authority), employment.govt.nz/resolving-problems
- Employment New Zealand (MBIE), wage and holiday pay arrears can generally be recovered for up to six years; holiday and leave pay is treated as wages under the Holidays Act 2003, employment.govt.nz
- MBIE and Beehive, "Minimum wage is increasing on 1 April 2026" (adult $23.95; starting-out and training $19.16), employment.govt.nz and mbie.govt.nz
- Employment Relations Authority penalties of up to $10,000 for an individual and $20,000 for a company for each breach, employment.govt.nz
Note: this guide is general information about New Zealand employment law, not legal advice. Time limits and calculations can depend on your exact circumstances, and the Holidays Act is under review, so confirm the current rules with Employment New Zealand or seek advice for your own situation.
Related tools and guides
- Final Pay Calculator - work out wages and holiday pay owed when you leave
- Holiday Pay Calculator - check the 8% holiday pay on your earnings
- Annual Leave Calculator - track leave accrued and owed
- Minimum Wage Calculator - check your pay against the minimum wage
- Annual leave explained
- Public holiday pay
- Redundancy rights and money
- 90-day trials
- Youth and Starting-Out Wages, related background.
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