The Holidays Act: 6 'best practice' compliance tips

Holidays Act business compliance

The Holidays Act (2003) is a widespread issue for businesses across New Zealand. With NZ organisations continuously facing scrutiny in the media for underpaying staff, employees are becoming more and more aware they should be checking into their holiday pay and entitlements.


By improving knowledge on the requirements of the Act, businesses can reduce the risk of brand damage, while promoting a fair work environment and company culture. Ultimately, it’s important for employers to meet their obligations for Holidays Act compliance, and get set up with the right processes and systems to reduce the risk of underpayments.

To provide some guidance along the way, we’ve noted down some tips to help businesses, payroll bureaus, accountants and bookkeepers to identify areas of improvement with their payroll approach, improve efficiencies, and promote best practice for achieving Holidays Act compliance:

1. Appoint a skilled payroll professional to manage payroll

Without a payroll expert behind it, the most advanced payroll software runs the risk of being non-compliant. With knowledge of the ins and outs of payroll legislation, payroll experts can set software up with the right configurations and data, confidently manage the complexities of payroll, and identify and solve any potential pitfalls in leave calculations.


Tip: Make sure your payroll administrator has been sent on a training course! If you decide to outsource your payroll, ensure it’s to a reliable and credible payroll bureau who will provide payroll visibility and answer any concerns along the way.

2. Record time and attendance in the cloud

Paper records have a higher risk of misplacement. An efficient cloud based time and attendance system that flows into payroll will ensure employers have a record of the hours worked each day in a pay period by each employee. An integrated cloud time and attendance system streamlines data from the employee to pay runs easily, without the need to manually input or calculate hours worked. 

3. Educate employees on their minimum entitlements

Educating employees about their minimum entitlements can:

  • Instil responsibility among employees to check their payslips more thoroughly
  • Help employees understand their pay rates and leave balances
  • Identify issues relating to holiday and leave entitlements in a timely manner


Tip: Having a payroll software with calculation transparency allows payroll managers to justify methods and answer staff payroll queries easily!

4. Be aware of changes in employee work patterns 

When permanent or temporary changes to an employee’s agreed work pattern occur, it has a potential impact on employee leave entitlements. Being aware of changes means the payroll manager can make necessary adjustments in the software to ensure calculations are applied correctly.


Tip: Having a payroll software that can easily adapt and change with the employee would make this a much more seamless process.


5. Ensure access to relevant data

In order to correctly calculate employees’ entitlements and pay - especially for employees whose hours/days vary - payroll must have all up to date information from HR, line managers and employees. This could be timesheet data, leave requests, or entitlement changes.


Tip: This would be made much easier with a system that can track information in real time using cloud-based mobile apps or an employee self service portal.


6. Ensure your payroll software matches the demands of the Act

Payroll software should be flexible and sophisticated enough to manage complex rules and unique employee scenarios - especially those employees with variable hours. A good software should also have calculation transparency to ensure no calculation methods are missing, and users can provide justification for all calculations in the pay run if asked. 


Have compliance confidence with KeyPay

Find tools to make life easier when navigating the Holidays Act. KeyPay New Zealand streamlines payroll and employee management in one consolidated system. With timesheets and rostering integrated straight into payroll, employee data is always up to date when managing leave calculations and entitlements. Calculation transparency provides confidence that calculation methods are being carried out accurately, and with compliance.


Want more insights? Download our white paper: Navigating the Holidays Act and ensuring payroll compliance.


Kate Brown

Marketing Manager at KeyPay

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