Employee leave, done right

Don’t let payroll compliance keep you up at night. PayHero handles employee leave in line with the Holidays Act 2003 and the latest government guidance.

What’s the issue with payroll compliance in NZ?

Widespread problems with Holidays Act compliance have hit the news in recent years, with large organisations and government agencies paying out millions to employees to cover historical underpayments.

Recently MYOB has admitted problems with their range of payroll products, potentially affecting tens of thousands of businesses. Most payroll software in New Zealand will have similar issues to MYOB.

While the issues encompass a wide range of payroll calculations, the main area for concern is the calculation of employee leave balances when leave is accrued based on hours (or days) actually worked.

The Holidays Act 2003 provides employees with four weeks of annual leave for each year of employment, regardless of the number of hours worked in the previous year.

In 2017 the Ministry for Business, Innovation and Employment released updated Holidays Act guidance that specifically discourages accruing leave with each pay.

“It is strongly advised that annual holidays balances are kept in weeks. This will reduce the risk of non-compliance. Keeping balances in units other than weeks can lead to non-compliance if work patterns change.” p.32

We built PayHero to handle leave correctly in line with the Holidays Act 2003 and the latest guidance from MBIE. Join PayHero now and leave compliance concerns behind.

Read more: Holiday Pay Problems in New Zealand

Stress-free Holidays Act compliance


Annual leave in weeks

PayHero stores annual leave in weeks and determines employee entitlements at the time they take leave. MBIE advises that keeping leave balances in hours or days (like most payroll systems) can lead to non-compliance if work patterns change.


Accurate when work patterns change

Many payroll systems accrue annual leave with each pay. However, if an employee’s work pattern changes the accrued balance may no longer represent four weeks of leave. PayHero doesn’t accrue leave - instead we show you and your employees current leave due and estimated leave in advance. Leave is evaluated when it is taken, rather than being based on what employees have hypothetically accrued or ‘earnt’ over time.


Get entitlements right for variable hour staff

For employees without a consistent or agreed work pattern PayHero uses a review period to determine what a 'week' of leave looks like. When the employee takes leave we use the review period to calculate what portion of the annual holiday entitlement is being taken.


Use timesheet history to calculate leave rates

To properly calculate leave entitlements for variable hour employees you need a full record of hours and days worked. Combining online timesheets and payroll in a single system means PayHero can automatically calculate the right entitlements for you.


Transparent leave calculations

The details of the Holidays Act can be hard for employees to comprehend. PayHero gives your staff the numbers they need to understand how their leave and holiday payments have been calculated, so they can trust the entitlements and deductions in their pay.


Easy public holiday payroll

No more painstaking public holiday calculations or costly payroll errors! Save on paperwork and manual processing by using timesheet history to automatically calculate public holiday entitlements for variable work pattern employees.


Need help switching to PayHero?

If you have concerns about your current payroll compliance we can provide advice about how to review your historical leave balances and entitlements and help you enter those into PayHero. Just contact support@payhero.co.nz and we’ll get you sorted.

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