Got employees going on annual leave - when do you need to pay them?

Most people are not aware that technically, legislation says that annual leave payments need to be paid, in full, before an employees leave is taken.

Thinking about why this is, takes us back to the days of being paid with a little brown envelope fill of cash, and the fact the employee won't be here the following pay day to collect that cash.   Yes, that legislation is outdated like a lot of our employment law, but it is what we are currently have to work with and therefore, the law.

However, it can be paid out in the regular pay cycle, if there is agreement between the parties and it is better for the employee (because we can always do better than minimum legal rights, but not worse).

In practice, most companies and employees prefer to take the pay each pay day approach and keep to their regular pay cycle, as it's much easier to manage.  And, as long as you have agreement, then everyone is happy.

As always, to ensure you cover yourself, get that agreement in writing.

Happy holidays!

We cover in full detail all of these payroll topics in our training via the Small Business Training Hub.   If you want to master payroll with confidence and ensure you get your payroll right, join us on the NZ Payroll Essentials: Mastering Compliance with Confidence training program.