Closing your New Zealand business down for Christmas? Here are the general conditions that will impact on your relationship with your employees.
Annual Holidays
An employee in New Zealand is entitled to four weeks’ paid annual leave after one year of employment. If the employee leaves before completing a full year service, annual holiday pay is calculated at 8% of their year-to-date gross earnings less any holiday pay already paid.
The employer can also use the 8% (of gross earnings) option for a casual employee or someone with a fixed-term employment agreement. The employer has to give its employees at least 14 days’ notice before an annual closedown.
Cash-Up Holiday Pay
Some employees may want to “cash in” their annual leave entitlement. The Holiday Act 2003 allows them to “cash in” up to one week of their annual leave entitlement if the employer agrees. The payment should be treated as an extra pay or unexpected bonus, and PAYE should be deducted accordingly. Employers need to calculate the PAYE using the rates for extra pay and make normal deductions for the student loan or Kiwisaver.
Public Holidays
In addition to annual leave, employees are also entitled to 11 public holidays each year, if the public holidays fall on the days they would normally work. They are entitled to be paid their relevant daily pay or average daily pay for the public holiday. There are special arrangements for Christmas (Christmas Day and Boxing Day) and New Year (both 1st and 2nd January) holidays where these holidays fall on a Saturday or Sunday.
If the Saturday or Sunday is not a normal working day for the employee – the holiday is transferred to the following Monday or Tuesday;
If the Saturday or Sunday is a normal working day for the employee – the holiday remains at the traditional day and the employee is entitled to that day off on pay.
If an employee works on a public holiday they must be paid at least time-and-a-half for the time worked. If the public holiday falls on a day they would normally work, the employee is also entitled to an alternative paid holiday.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.