Standard entitlement vs pay-as-you-go
Most employees in ongoing, regular work are entitled to the standard 4 weeks of annual holidays after 12 months of continuous employment…
Most employees in ongoing, regular work are entitled to the standard 4 weeks of annual holidays after 12 months of continuous employment, this is the default under the Holidays Act 2003 and cannot be substituted for a cash payment except in narrow, specific circumstances. Pay-as-you-go 8% is the exception, not a general option employers can choose freely: it's restricted to genuine fixed-term agreements under 12 months, or work that's genuinely so intermittent or irregular that providing 4 weeks of leave isn't practical.
| Situation | Entitlement | When it applies |
|---|---|---|
| Standard employment | 4 weeks after 12 months | Ongoing, regular employment, the default |
| Fixed-term under 12 months | 8% of gross earnings | Genuine fixed-term agreement shorter than 12 months, if agreed |
| Genuinely intermittent/irregular | 8% of gross earnings | Casual or highly irregular work where 4 weeks isn't practicable, if agreed |
Sources
5 official sources
- Holidays Act 2003, section 16, Entitlement to annual holidays: 4 weeks' paid annual holidays after each completed 12 months of continuous employment, and what counts towards continuity.
- Holidays Act 2003, section 28, When annual holiday pay may be paid with employee's pay: the pay-as-you-go 8% conditions (fixed-term under 12 months, or genuinely intermittent/irregular work, agreed and itemised separately).
- Employment New Zealand, Annual holidays: plain-language guidance confirming the 4-week entitlement and anniversary-date mechanics.
- Employment New Zealand, Pay-as-you-go annual holidays: confirms eligibility conditions for the 8% arrangement.
- Employment New Zealand, Sick leave: 10 days after 6 months' continuous employment (or the equivalent work test), with carry-over into the next entitlement period up to a capped accumulation.
Left out: the exact dollar calculation of ordinary weekly pay vs average weekly earnings (depends on individual pay records, explained above but not computed), and final-pay holiday calculations on termination, since these need your actual pay history.
FAQ
When do I actually get my 4 weeks of annual holidays?
The full 4-week entitlement legally arises in one block after each completed 12 months of continuous employment with the same employer, on your anniversary date, it isn't built up gradually day by day the way a US-style PTO balance is.
Can I take annual holidays before I've completed 12 months?
Only if your employer agrees to let you take holidays in advance of your entitlement date. There's no automatic right to paid annual holidays before your first anniversary, though many employers allow it.
What is pay-as-you-go (8%) and who actually qualifies?
It lets an employer pay 8% of gross earnings as holiday pay with each pay instead of providing 4 weeks of annual holidays, but only for a genuine fixed-term agreement under 12 months, or work so intermittent or irregular that 4 weeks isn't practicable, and only if it's agreed in the employment agreement and shown separately on payslips.
How much is my holiday pay actually worth?
You're paid at whichever is greater: your ordinary weekly pay at the time you take the leave, or your average weekly earnings over the previous 12 months. This calculator explains the rule but doesn't compute a dollar figure, since it depends on your actual pay records.
What happens to unused annual holidays if I leave my job?
Any annual holidays you're entitled to but haven't taken must be paid out in your final pay, along with a calculated amount for holidays not yet legally accrued since your last anniversary date, worked out as a percentage of your gross earnings.
How does sick leave work in New Zealand?
Eligible employees get 10 days of paid sick leave once they've worked continuously for 6 months (or meet the equivalent work test), renewing each entitlement period, with unused days carrying over up to a maximum accumulation rather than resetting to zero.
Do public holidays count as part of my annual holidays?
No. Public holidays are a separate entitlement, if one falls on a day you'd normally work, you get it off on top of your annual holidays, or receive alternative compensation, not a deduction from your annual holidays balance.
What if I work casual, part-year or highly variable hours?
You still legally accrue towards the standard 4-week entitlement unless your employer has correctly set up a genuine pay-as-you-go 8% arrangement in your employment agreement. Being paid casually does not, by itself, remove your right to annual holidays.