New Zealand: Holiday pay calculations; avoid errors | KPMG | GLOBAL

New Zealand: Holiday pay calculations; avoid errors

New Zealand: Holiday pay calculations; avoid errors

There are numerous stories in the media about employers making holiday pay calculation errors. It appears tens of thousands of employees may be affected.


Related content

The calculation of holiday pay is based on a formula in the Holidays Act 2003, that employers (and their payroll providers) may not be applying correctly—in particular, employers with employees who have irregular work patterns (e.g., part time, casual or shift workers). It is also necessary to consider whether discretionary payments to employees, public holidays and sick and bereavement leave have been appropriately accounted for in the holiday pay calculation. 

KPMG observation

To give comfort to management and others, including employees, that holiday pay is being calculated correctly, independent consideration of these calculations may be considered. The holiday pay calculation is only one of a number of components of a payroll system. The accuracy of PAYE, ACC, and KiwiSaver deductions and correct classification of benefits (e.g., commissions, bonuses and non-cash amounts) are also important. Therefore, employers need to evaluate their payroll processes and practices. 


Read an April 2016 report [PDF 516 KB] prepared by the KPMG member firm in New Zealand: Navigating Holidays Act issues

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal