calculating holiday pay - holidays act 1981

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Holiday pay for a full year’s entitlement is calculated in 3 simple steps.

Step 1

Your employer works out the weekly average of your total gross earnings by dividing your “total gross earnings” for the whole of the year of employment by 52. This gives your “average weekly earnings. (Note: “total gross earnings” means all salary, wages, overtime pay, allowances, commission, and any previous holiday pay paid.)

Step 2

Your employer then works out what your ordinary weekly pay is by multiplying your ordinary hourly rate of pay by the number of hours you normally work each week. This gives your “ordinary weekly pay”.

Step 3

Whichever of these amounts is the LARGER becomes the rate of your weekly holiday pay.

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Here’s an example

Step 1

Say total gross earnings for the year October 2002 to October 2003 are $32,000. Divide this by 52 to get the average weekly earnings of $615.38

Step 2

But, the ordinary weekly pay is $625.00

Step 3

The larger of these is ordinary weekly pay.

So, holiday pay for EACH week of the holiday is $625.00.

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Holiday pay at the end of employment

All holiday pay due to an employee (i.e. total entitlement less any holiday pay already received) should be paid to the employee at the time the employee leaves the job.

Employees who work for less than three weeks are entitled to holiday pay of 6% of their total ordinary pay.

Employees who work more than 3 weeks but less than one year are entitled to 6% of their total gross earnings for the period worked.

Employees who work more than a year are entitled to:

• holiday pay for the completed year; plus
• 6% of total gross earnings for the remaining part year.

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This page was last updated on: 20-Apr-2005 and is current.