Resigning from your job: Outstanding holiday pay

Forums › Off topic › Resigning from your job: Outstanding holiday pay

ajobbins

5052 posts

Uber Geek

Trusted

#90981 4-Oct-2011 23:11

Hypothetical question: I have a couple of week leave outstanding. If I were to quit my job today, does that leave get paid out at my current salary rate? Most of the leave was 'earned' when I was on a lower salary than I am on now. Or does each day get paid at my pay rate when I 'earned' that days leave?

Twitter: ajobbins

1 | 2 | 3

4973 posts

Uber Geek

Moderator

Trusted

Lifetime subscriber

#529256 4-Oct-2011 23:12

What you are on now, as if you took it before you left, it would be what you are paid now, not back when you earnt it.

gzt

17104 posts

Uber Geek

Lifetime subscriber

#529257 4-Oct-2011 23:13

Current salary. If you took two weeks off today, you would get paid for that at your current salary.

ajobbins

5052 posts

Uber Geek

Trusted

#529259 4-Oct-2011 23:13

Excellent

Twitter: ajobbins

Stu

Hammered
8332 posts

Uber Geek

Moderator

ID Verified

Trusted

Lifetime subscriber

#529269 4-Oct-2011 23:38

And the associated tax deduction :-(

LennonNZ

2459 posts

Uber Geek

ID Verified

Trusted

#529276 5-Oct-2011 00:07

gzt: Current salary. If you took two weeks off today, you would get paid for that at your current salary.

Actually its your average wage weekly wage over the last 12 months or your existing weekly wage.. whatever is the highest.

Described here:

http://www.dol.govt.nz/er/holidaysandleave/annualleave/employee-resignation-termination.asp

Where an employee resigns or employment ends after becoming entitled to annual holidays, the first amount to be calculated is the greater of ordinary weekly pay or average weekly earnings for the annual holidays to which the employee is entitled under the Act, as if the holidays were being taken at the end of the employment.

cisconz

cisconz
1341 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#529277 5-Oct-2011 00:15

ajobbins: Hypothetical question: I have a couple of week leave outstanding. If I were to quit my job today, does that leave get paid out at my current salary rate? Most of the leave was 'earned' when I was on a lower salary than I am on now. Or does each day get paid at my pay rate when I 'earned' that days leave?

Don't forget that if there is a public holiday durring your payout period of holiday pay then you get paid that too. i.e if i had 4 weeks owing to me and quit today then I should get 4 weeks and 1 day because of Labour Day.

Hmmmm

bazzer

3438 posts

Uber Geek

Trusted

#529298 5-Oct-2011 07:42

cisconz:
ajobbins: Hypothetical question: I have a couple of week leave outstanding. If I were to quit my job today, does that leave get paid out at my current salary rate? Most of the leave was 'earned' when I was on a lower salary than I am on now. Or does each day get paid at my pay rate when I 'earned' that days leave?

Don't forget that if there is a public holiday durring your payout period of holiday pay then you get paid that too. i.e if i had 4 weeks owing to me and quit today then I should get 4 weeks and 1 day because of Labour Day.

Are you sure? I've never heard this. It makes sense, since you can think of getting paid out your holiday pay as just taking leave after your end date but like I say, I've never heard this.

Equinox IT

Cloud spending continues to surge globally, but most organisations haven’t made the changes necessary to maximise the value and cost-efficiency benefits of their cloud investments. Download the whitepaper From Overspend to Advantage now.

Neets

1376 posts

Uber Geek

Trusted

#529319 5-Oct-2011 08:17

bazzer:
cisconz:
ajobbins: Hypothetical question: I have a couple of week leave outstanding. If I were to quit my job today, does that leave get paid out at my current salary rate? Most of the leave was 'earned' when I was on a lower salary than I am on now. Or does each day get paid at my pay rate when I 'earned' that days leave?

Don't forget that if there is a public holiday durring your payout period of holiday pay then you get paid that too. i.e if i had 4 weeks owing to me and quit today then I should get 4 weeks and 1 day because of Labour Day.

Are you sure? I've never heard this. It makes sense, since you can think of getting paid out your holiday pay as just taking leave after your end date but like I say, I've never heard this.

Hi, I manage a payroll bureau. When you resign, if you have any outstanding leave that takes you past a public holiday, then your current employer must pay you for that public holiday.
Your outstanding Annual Leave is paid out at whatever is higher, the average (hourly) rate of the last 52 weeks (the 52 weeks obviously moves each week that goes by) or your current (hourly) rate.
Therefore if you've received a pay increase during the 52 weeks, the 52 week average is most likely going to be lower than your current (hourly) rate. You're always paid the higher rate.

Some employers will take the gross of the termination pay and divide that by your standard gross pay e.g. 5000 / 2500 = 2. So they will tax the termination pay as if it represents 2 weeks. Others will not put any tax override in. Therefore for tax purposes the IRD will assume you earn $5,000 a week and calculate the tax based on that. There is no ruling by the IRD as to how to tax the termination pay when it is different to your normal weekly gross.

Please be aware that outstanding leave is leave you have accrued from a past Annual Leave year. The leave you are accruing in your current Annual Leave year is paid out at 8% of your Gross Earnings (that qualify). Some allowances paid may not qualify, the likes of a Bonus for instance doesn't have to be included in the Gross Earnings for the purpose of calculating the 8%.

If you're really keen, you can read the Holidays Act. It'll put you to sleep.

Samsung Galaxy S5 SM-G900I

cisconz

cisconz
1341 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#529341 5-Oct-2011 08:56

bazzer:
cisconz: Don't forget that if there is a public holiday durring your payout period of holiday pay then you get paid that too. i.e if i had 4 weeks owing to me and quit today then I should get 4 weeks and 1 day because of Labour Day.

Are you sure? I've never heard this. It makes sense, since you can think of getting paid out your holiday pay as just taking leave after your end date but like I say, I've never heard this.

An old employee left just before Easter and brought it up when they left, that is how I learnt about it. Most people don't know it so it pays to double check as I know a few people have missed out.

Hmmmm

bener

272 posts

Ultimate Geek

Trusted

#529370 5-Oct-2011 09:38

So, Neets, if I have been at my position for less than a year and I was to resign, I would be only paid out the accrued hours at 8% of the total value - e.g. if I had two weeks leave accrued I would be paid 8% of my normal fortnightly pay?

trig42

5809 posts

Uber Geek

ID Verified

#529395 5-Oct-2011 09:59

bener: So, Neets, if I have been at my position for less than a year and I was to resign, I would be only paid out the accrued hours at 8% of the total value - e.g. if I had two weeks leave accrued I would be paid 8% of my normal fortnightly pay?

No. You would be paid 8% of what you have earned since you started there. (8% of annual wage ~ 4 weeks pay if you worked a whole year). You would be taxed on this at your normal rate and maybe other adjustments, you would also recieve payment for any Days in Lieu that are owing to you (if you worked a public holiday and did not take another day off in compensation the payroll system should still have that there for you)

keewee01

1737 posts

Uber Geek

Trusted

#529455 5-Oct-2011 11:11

Neets - if I finished employment at the end of August, but my Holiday Pay took me through to mid-September, but then in early September the employer paid out bonuses for the previous year - would I be entitled to the bonus, or not (because I have resigned)? I handed in my resignation around early August (from memory - it was a few years ago).

bener

272 posts

Ultimate Geek

Trusted

#529463 5-Oct-2011 11:21

trig42:
bener: So, Neets, if I have been at my position for less than a year and I was to resign, I would be only paid out the accrued hours at 8% of the total value - e.g. if I had two weeks leave accrued I would be paid 8% of my normal fortnightly pay?

No. You would be paid 8% of what you have earned since you started there. (8% of annual wage ~ 4 weeks pay if you worked a whole year). You would be taxed on this at your normal rate and maybe other adjustments, you would also recieve payment for any Days in Lieu that are owing to you (if you worked a public holiday and did not take another day off in compensation the payroll system should still have that there for you)

Ah that makes sense, thanks for the explanation - I though that sounded a bit harsh, the way I read it!

Neets

1376 posts

Uber Geek

Trusted

#529470 5-Oct-2011 11:28

keewee01: Neets - if I finished employment at the end of August, but my Holiday Pay took me through to mid-September, but then in early September the employer paid out bonuses for the previous year - would I be entitled to the bonus, or not (because I have resigned)? I handed in my resignation around early August (from memory - it was a few years ago).

Hi there, bonuses are difficult. You'll need to review your employement contract. Some companies pay out bonsues based on profitability of the company and therefore they're not a given. Other companies the bonus is part of your total Remuneration package. There's no clear cut answer when it comes to bonuses, it's down to your employement contract, or good will of your employer if it's not clear. I'd definately ask about it if your contract doesn't state when it's due and the period it covers.

Samsung Galaxy S5 SM-G900I

Neets

1376 posts

Uber Geek

Trusted

#529473 5-Oct-2011 11:32

bener:
trig42:
bener: So, Neets, if I have been at my position for less than a year and I was to resign, I would be only paid out the accrued hours at 8% of the total value - e.g. if I had two weeks leave accrued I would be paid 8% of my normal fortnightly pay?

No. You would be paid 8% of what you have earned since you started there. (8% of annual wage ~ 4 weeks pay if you worked a whole year). You would be taxed on this at your normal rate and maybe other adjustments, you would also recieve payment for any Days in Lieu that are owing to you (if you worked a public holiday and did not take another day off in compensation the payroll system should still have that there for you)

Ah that makes sense, thanks for the explanation - I though that sounded a bit harsh, the way I read it!

Sorry if I didn't explain it very clearly. The gross earnings for the current Annual Leave year is what the 8% is calculated on. If you earnt a salary/wage of $1,000 a week and had worked 30 weeks, then your Gross earnings would be $30,000. Your holiday pay for the current Annual Leave year would be calculated as $30,000 x 8% = $2,400.00

Samsung Galaxy S5 SM-G900I

1 | 2 | 3