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Paying Holiday Pay

Calculating and paying holiday pay is easy when you know what your obligations are, and Inland Revenue has a calculator to help you work it out.

How to calculate holiday

Holiday pay is pay for an employee's annual leave and pay for statutory holidays. You need to include holiday pay as earnings in the period you pay your employee. If you don't have a payroll package or a payroll provider, there are two ways you can work it out:
  1. Use your employee's annual entitlement. Currently, employees are entitled to a minimum of four weeks annual leave after being employed by you for a year.
  2. Use 8% of your employee's gross earnings. You can only use this option if your employee:
    • has a fixed-term employment agreement
    • is a casual employee
    • stops working for you and has only accrued part of their leave entitlement.

To work out how much tax to deduct from holiday pay use Inland Revenue's Calculate tax on holiday pay calculator.

Thinking of hiring? Here's the calculator for you

The new Employee Cost Calculator is just the ticket for small business owners who want to employ someone, but are unsure of the costs.

Now you can quickly estimate the fixed and discretionary costs when you take someone on. The calculator was designed to help small to medium businesses make confident hiring decisions, and is part of a package of tools being developed by Business.govt.nz.

How it works

Using data from government agencies and Trade Me Jobs, the calculator tailors employment costs to your industry and the type of role you think your business might need.

You can find out what you're going to be paying straight away, and get a breakdown of the compulsory costs like ACC levies, KiwiSaver contributions and Fringe Benefit Tax. The tool also shows you the cost of employing someone in the first year, and a monthly ballpark for your budget.

Try out different scenarios for your business and email your results or save them as a PDF or .csv file.

Try the Employee Cost Calculator


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