Employees are one of the biggest costs, and the most important asset to a business, and annual holidays are a really important part of your teams health and wellbeing.\u00a0 Ensuring your team are getting what they are entitled to is your responsibility as their employer.\u00a0 If you don\u2019t get it right, it can cause frustration for the employee, friction in the workplace and could land you in hot water with the Employment Relations Authority.<\/p>\n
So how do you know they are getting paid correctly?<\/p>\n
Employees are entitled to four weeks leave per leave (that\u2019s weeks, not days, or hours, but weeks).<\/p>\n
You need to know what a week looks like every time an employee takes leave.\u00a0 For those working regular days and hours, this can be easily determined.\u00a0 For those whose work is irregular – not the same each week – then this can a lot harder to keep track of.<\/p>\n
Payment for annual leave is made by working out what their ordinary weekly pay is, and comparing it to their average weekly earnings.\u00a0 The employee is paid at the higher of these two calculations.<\/p>\n
If you don\u2019t know what the ordinary weekly pay is due to an irregular work pattern, then the ordinary weekly pay is calculated using the last four weeks earnings and dividing it by 4.<\/p>\n
A lot of payroll software gives you all three options at the time you are entering the leave, and you could inadvertently end up overpaying your team for their annual leave if the wrong ordinary weekly earnings calculation is used, or underpaying them if you select the wrong rate.<\/p>\n
Leave payments are such a massive topic for employers and payroll managers and extremely important to get right. \u00a0\u00a0Other common questions we get asked are things like do we have to agree to cash up leave? What if they have a bereavement while on leave? \u00a0And can I just pay 8% of gross earnings?<\/p>\n
Paying staff correctly for annual leave is just one of the core topics covered in depth in our upcoming Small Business Training Hub payroll training courses starting in the second week of August.\u00a0\u00a0\u00a0\u00a0 Employers are responsible for ensuring their staff are paid correctly, and this is why we have developed the Payroll Essentials training course, to ensure you have all of the information you need at your fingertips to do this important business function correctly.<\/p>\n
All the information is here to find out more and register for the next intake.\u00a0 https:\/\/ontrackbookkeeping.co.nz\/payroll-essentials\/<\/p>\n
If you have any questions let us know, or register for the course here:<\/p>\n