Annual Leave Guide for Employers in NZ

Annual leave is paid time off that lets employees rest, recharge, and spend time with family. In New Zealand, every employee covered by the Holidays Act 2003 has the right to annual leave. Employers must know how to calculate, manage, and approve this leave correctly.

Getting annual leave right matters for New Zealand businesses. It helps avoid disputes, ensures compliance with the law, and builds a positive workplace culture. In cities like Auckland, where competition for talent is high, fair leave management also makes businesses more attractive to employees.

In this guide you’ll learn:

• What annual leave is and how it works in New Zealand
• How annual leave entitlements are calculated
• Rules around accrual, payout, and cashing up leave
• When employers can decline or require annual leave
• Practical tips for managing leave fairly in your business
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What Is Annual Leave in New Zealand?

Annual leave is the paid holiday time employees earn each year. In New Zealand, the standard entitlement is a minimum of four weeks of paid annual leave after 12 months of continuous employment. Some workplaces offer more, such as five weeks annual leave, to attract and retain staff.

Annual leave is separate from sick leave, bereavement leave, or public holidays. It’s designed to give employees real rest time, not just cover unexpected events.
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How Much Annual Leave Do You Get in NZ?

By law, employees are entitled to four weeks of annual leave per year. This usually equals 20 working days for full-time employees working five days a week.

Some key points for employers:

• Part-time staff also get annual leave, but it is based on their agreed hours.
• Annual leave in advance can be agreed upon, but it is not required.
• Many businesses use an annual leave calculator tool to check balances.

How Is Annual Leave Calculated in NZ?

Annual leave entitlement is based on continuous employment. After 12 months, employees get their full four-week entitlement. From that point, leave accrues year by year.

To calculate annual leave:

• Convert annual leave weeks to hours if needed, especially for shift workers.
• Use an annual leave payment calculator to check correct pay rates. Pay should be the higher of the employee’s ordinary weekly pay or their average weekly earnings over the past 12 months.

Accrued Leave and How It Works

The term annual leave accrued meaning refers to leave an employee has earned but not yet taken. For example, an employee may build up leave days each week. A common question is: how much annual leave do you accrue per week?

For full-time staff, the answer is roughly 0.33 days per week, which equals four weeks over a year. But employers must remember the legal entitlement only becomes available after 12 months.
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Taking and Managing Annual Leave

Employees usually request leave in writing, and employers must act fairly when deciding. Some businesses in Auckland told us they struggle when many staff want the same holiday period, such as over Christmas.

Employers can:

• Approve or decline annual leave requests, but they must have a genuine reason.
• Require employees to take annual leave, for example during a business shutdown, as long as at least 14 days’ notice is given.
• Declining annual leave requests is allowed, but only if business needs justify it.

Cashing Up and Payouts of Annual Leave

Employees can ask to cash up annual leave, but only up to one week per year and only if the employer agrees. It is not a right for employees to demand.
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If employment ends, employers must make an annual leave payout. This includes any accrued leave the employee has not used. Employers should calculate this carefully to avoid disputes.
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Public Holidays and Annual Leave in New Zealand

Annual leave is separate from New Zealand public holidays. For example, the New Zealand annual leave holidays 2025 calendar includes statutory holidays like Waitangi Day and Anzac Day. If an employee is on annual leave and a public holiday falls within that time, the day must not be deducted from their annual leave balance.

Can Employees Use Annual Leave for Sick Leave?

Employees cannot normally swap annual leave for sick leave. However, if sick leave runs out, employers and employees can agree to use annual leave. This flexibility can support staff in genuine cases while still following the law.

Key Takeaways for Employers

• Employees are entitled to at least four weeks of annual leave each year.
• Annual leave must be calculated correctly using NZ law.
• Employers can decline requests but need fair, business-related reasons.
• Cashing up annual leave is allowed, but only up to one week per year.
• Clear communication and good systems help prevent disputes.

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