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Leave calculations

When it comes to calculating your employees' leave, MYOB does all the hard work.

At a glance

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    Leave calculations are governed by the requirements of the Holidays Act 2003.

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    Leave is calculated in MYOB using the days and hours an employee works.

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    Annual holidays are paid at the greater rate of ordinary weekly pay (OWP) and average weekly earnings (AWE).

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    Other leave, like sick leave, is calculated using relevant daily pay (RDP) or average daily pay (ADP).

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    There are options in earnings pay items which control if the earning is included in leave calculations.

Days and hours worked

When you pay leave, the amount paid is calculated using the hours or days the employee typically works per week. If an employee works the same hours and days each week, you can enter these values in their standard pay (Payroll menu > Employees > click the employee > Standard pay tab). If an employee's days or hours vary, you can enter or update these values when you do a pay run.

Days and hours worked per week highlighted in an employee standard pay

Days worked per week

This includes all days being paid, including normal days worked and any paid leave taken. This value is used to calculate the pay rate for sick leave, public holidays, public holidays worked, alternative holidays and bereavement leave.

Hours worked per week

This is used as the definition of a week for calculating the pay rate for annual holidays.

When you do a pay run, these values are used to calculate leave payments. If an employee's days or hours vary, you can update it here.

Days and hours paid highlighted in a pay run

Helping you calculate leave rates

There are different rates used for different leave payments. Here's a description of each and some guidance on which rate to use.

Including earnings in leave calculations

When you create earning pay items, like overtime, allowances, bonuses or other payments, you can choose to include the earning in leave payment calculations.

Example earning with leave calculations options highlighted
  • Include in Ordinary Weekly Pay - Ordinary weekly pay is the amount an employee receives under their employment agreement for an ordinary working week, including:

    • regular allowances, such as a shift allowance

    • regular productivity or incentive-based payments (including commission or piece rates)

    • the cash value of board or lodgings

    • regular overtime.

    If you're not sure if an earning pay item should be included in ordinary weekly pay, check the Employment New Zealand website.

  • Include in gross earnings - Gross earnings typically means all payments you're required to pay under an employee's employment agreement for the period during which the earnings are being assessed. If all of the components of gross earnings are not included in the relevant calculations for holidays and leave, the employee will likely be underpaid.

    If this option is selected for an earning pay item, the pay item will be used for average weekly earning (AWE), average daily pay (ADP) and termination payments to calculate the 8% of gross earnings since last anniversary earnings.

    If you're not sure if an earning pay item should be included in gross earnings, check the Employment New Zealand website.