NZ 8% Pay-As-You-Go Holiday Pay Calculator

This calculator works out New Zealand's 8% pay-as-you-go (PAYG) holiday pay loading, the alternative to accruing standard annual leave that section 28 of the Holidays Act 2003 allows for two groups: casual employees whose work is genuinely intermittent or irregular, and fixed-term employees on contracts under 12 months. Getting this wrong is a common and costly mistake, so the tool starts with an eligibility check before doing any maths. You select your employment type, confirm whether the 8% arrangement is written into the employment agreement, and confirm whether it is shown as a separate line on the payslip. Enter the gross pay for the period and the calculator returns a clear eligibility banner telling you whether 8% PAYG is allowed, and why. Where it is allowed, you get the 8% loading amount, the total gross pay including that loading, and an annual equivalent based on 52 pay periods at the same gross figure. Where regular hours suggest the worker is really permanent, or the formal requirements aren't met, it flags the risk that MBIE could reclassify the role and require back-paid annual leave instead. Use it to check a casual or fixed-term arrangement is genuine and properly documented, work out the right loading for a pay run, and see what the 8% does and doesn't cover. Figures are indicative and depend on your actual employment agreement and working pattern.

Updated  Implements section 28 of the Holidays Act 2003.
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Step 1: Eligibility check

Step 2: Pay calculation

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When 8% PAYG is allowed

Section 28 of the Holidays Act 2003 allows the 8% pay-as-you-go arrangement only for two specific employee types:

  1. Casual employees with genuinely intermittent or irregular work. The defining feature is unpredictability - hours vary, the employee can refuse work, no fixed roster, no expectation of continuing employment.
  2. Fixed-term employees on a contract of less than 12 months. The fixed-term arrangement must be genuine (not disguised permanent employment).

The three formal requirements

  • The 8% PAYG arrangement must be agreed IN WRITING in the employment agreement
  • The 8% holiday pay portion must be IDENTIFIED SEPARATELY on the employee's payslip
  • The 8% must be paid in EACH pay period (not lumped together at end of contract)

The "genuine intermittent" test

MBIE applies a strict test for casual workers. If the actual working pattern looks regular (similar hours each week, fixed shifts, expected to keep working), the employee is permanent regardless of what the contract says. MBIE and IRD have actively prosecuted employers who use 8% PAYG to avoid the cost of accruing proper annual leave for what are effectively permanent employees.

What 8% replaces (and doesn't replace)

  • Replaces: 4-week annual leave entitlement (mathematically 4/52 = 7.69%, rounded to 8%)
  • Does NOT replace: Public holidays, sick leave (10 days/year, available after 6 months of continuous employment), bereavement leave, parental leave entitlement

PAYE and KiwiSaver on the 8%

The 8% loading is part of gross earnings. PAYE, ACC earners' levy, KiwiSaver contributions (employee and employer), ESCT, and student loan repayments all apply to the GROSS amount including the 8%. So the 8% effectively grosses up by your tax rate before reaching the employee's bank account.

Sources

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Frequently asked questions

Who can be paid the 8% pay-as-you-go holiday pay?

Two types of employees: (1) Casual employees whose work is genuinely intermittent or irregular - making it impractical to predict or schedule annual leave; OR (2) Fixed-term employees on a contract of less than 12 months. The arrangement must be agreed in writing in the employment agreement, the worker's payslip must clearly identify the 8% holiday pay portion, and it must be paid each pay period. Permanent employees with regular hours CANNOT be paid 8% PAYG.

What is the 'genuine intermittent work' test?

MBIE applies a strict test: work must be GENUINELY casual or intermittent. Indicators of genuine casual work: no fixed roster, work offered on a job-by-job basis, employee can refuse work, no expectation of ongoing work, irregular hours from week to week. Indicators that the relationship is NOT genuinely casual (and the employee should be permanent on standard 4-weeks leave): regular weekly hours, fixed roster, expectation of continuing work, MBIE has prosecuted employers using 8% PAYG to disguise permanent employment.

Is 8% the same as 4 weeks annual leave?

Yes mathematically: 4 weeks of leave out of 52 weeks = 7.69% (often rounded to 8%). The 8% figure compensates the employee in cash for not accruing leave entitlement they wouldn't be able to use anyway (because the employment relationship ends or is intermittent). PAYG employees still get public holidays and sick leave - only the annual leave is converted to the 8% loading.

What about KiwiSaver and other entitlements for PAYG employees?

The 8% PAYG holiday pay is part of gross earnings for: KiwiSaver contributions (employee and employer both calculated on gross including the 8%), PAYE/income tax, ACC earners' levy, and student loan repayments. Public holidays still apply if worked or if it's an otherwise working day. Sick leave entitlements still apply (10 days per year, available after 6 months of continuous employment). The only thing the 8% replaces is the annual leave entitlement.