Long Service Leave Guide

Long service leave is extra paid time off (or equivalent pay) that some employers grant to employees who’ve served a long period. Unlike annual leave or sick leave, it is not mandated by New Zealand law.

Because long service leave is contractual (i.e. only applies if agreed), many businesses in New Zealand,  especially private companies, don’t offer it by default.
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However, certain sectors, especially public service agencies, DHBs, or collective agreements, still include it. For example, many public service agreements offer 2 weeks’ leave after 10 years, and 1 additional week after 15 or 20 years. For New Zealand employers aiming to build strong culture and loyalty, offering long service leave can be a powerful retention tool; but only if you do it carefully and clearly in your employment agreements.

In this guide you’ll learn:

• What rules around long service leave look like in NZ
• What to include in your employment agreement
• How to calculate leave and pay
• Example clauses and a simple long service leave calculator idea

What Are the Rules Around Long Service Leave in NZ?

In New Zealand, there is no legislative requirement for an employer to provide long service leave. Any entitlement must be agreed in the employment agreement or in a collective agreement (or as part of policy). 
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When Organisations Do Provide It

• It tends to appear in public sector or government agreements (or legacy agreements carried over).
• Some employers use it to reward loyalty and longevity.
• The specific thresholds (how many years, how many weeks) vary.

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Example in Public Service / DPMC

In the DPMC (Department of the Prime Minister and Cabinet):

• After 10 years of continuous service - 2 weeks long service leave.
• After 15 years - 1 week; after 20 years - 1 week.
• The leave must be taken within 5 years of becoming entitled, else it is forfeited.
• Unused entitlements on exit are paid out.

Another example: salaried medical and dental practitioners under MECA arrangements: 2 weeks after 10 years.
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How To Include Long Service Leave In Employment Agreements

To make the arrangement clear and enforceable, the agreement should cover:

• Qualification / Accrual trigger: how many years or continuous service before entitlement
• Amount of leave: weeks or days per entitlement
• When it must be taken: time limits or windows to use it
• Pay rate during leave: usually “ordinary pay” (not overtime or penalty rates)
• Unused leave: whether unused leave is forfeited, carried forward, or paid out
• What happens on termination / resignation: whether leave is paid out on exit (if unused)
  

Example clause template:
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“After 10 years of continuous service, the Employee is entitled to 2 weeks’ long service leave. That leave must be taken within 5 years of entitlement. The leave is paid at the Employee’s ordinary weekly pay. Any unused entitlement upon termination of employment will be paid out as part of final pay.”

Adjust the numbers to match your business policy or sector norms.
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How To Calculate Pay For Long Service Leave

Because the term is contractual, calculation methods can differ. But common approaches in NZ include:

• Use the ordinary weekly pay at the time the leave is taken (excluding overtime, penalties)
• If the pay varies, use the average weekly pay over the past 52 weeks or a defined averaging period (if that gives a fairer result)
• Always ensure the formula is clear and fair to both employer and employee

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Key Takeaways for Employers and Employee

• Long service leave is not a statutory entitlement in New Zealand; only applies if agreed in writing.
• Many public sector and legacy arrangements use 2 weeks after 10 years and additional weeks after further service. 
• Your employment agreement must clearly set out eligibility, amount, pay rate, time to take, and what happens on exit
• Cashing out is allowed only if your agreement says so
• On termination, a payout may be required if that is in your agreement

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