Skip to main content

Attaché Payroll (New Zealand): Annual leave rate calculation is less than it should be

Steps to help you identify and resolve incorrect annual leave rate calculations for employees in New Zealand payroll.

In New Zealand, the annual leave rate is calculated as either the ordinary weekly pay or the average weekly earnings over the last 12 months — whichever is higher. If you have found that the rate calculated in a timesheet is not correct, follow the steps below to troubleshoot the issue.

📌Note: For more information on how the annual leave rate is determined, see the New Zealand Government guidance on annual leave pay.

Run the NZ Annual Leave Pay History report

To begin troubleshooting, run the NZ Annual Leave Pay History report to see which transactions have been included in the average rate calculation over the last 12 months.

  1. Click Payroll, Reports, Leave, NZ Annual Leave Pay History.

  2. Review the transactions listed on the report.

Check the income type code settings

For any income type codes that appear on the report, review their settings to ensure they are configured correctly.

Include in Ordinary Leave Calc setting

  1. Go to Setups, Payroll, Income Types, Maintain.

  2. Check whether the Include in Ordinary Leave Calc setting is correctly selected for each income type code:

  • Any income type code that represents ordinary earnings should have the Include in Ordinary Leave Calc setting selected. This ensures those transactions are included as part of the annual leave rate calculation.

  • Any income type code with a Rate Multiplier of less than 1.000 should not have the Include in Ordinary Leave Calc setting selected, as these should not be included in the annual leave rate calculation.

Rate Multiplier

Check the Rate Multiplier value on each income type code:

  • The Rate Multiplier should be 1.000 or more for ordinary earnings income type codes.

  • Active income type codes with a Rate Multiplier of less than 1.000 — such as Shift Allowances and similar codes — should not be included in the annual leave rate calculation.

🤓Tip: To check the Rate Multiplier for each income type, go to Payroll, then click Reports, then click Pay Element Details, then click Income Types.

Test the annual leave rate

Once all income type codes have been checked and configured correctly, confirm the fix is working as expected.

  1. Enter a timesheet entry for Annual Leave for an employee.

  2. Confirm that the correct annual leave rate is being applied.

Related Articles
Did this answer your question?