Paying Out Holiday Pay


In most cases holiday pay would only be paid out when an employee finishes, however, there are circumstances in which you may want to pay out holiday pay accrued such as an employee changing to holiday pay-as-you-go.

Note : If an employee has taken days off as annual leave then always use the Annual Leave Taken pay code.

To pay out the total holiday pay accrued simply add the Holiday Pay pay code to the employee's pay. When you calculate the pay FlexiTime will add the total Holiday Pay to the employee's pay. Partial amounts cannot be paid out in this way, only the total Holiday Pay owing.

If the employee is to be on holiday pay as you go then you can add the Holiday Pay pay code to the employee's default pay codes under Setup > Employee. This will pay out the total holiday pay accrued each pay day. Leave the default quantity and rate as zero - FlexiTIme will set these appropriately.

Cashing in annual leave is different to paying out holiday pay. For an explanation on the difference between Holiday Pay and Annual Leave please see this article. 

An employee can cash in up to one week of annual leave each employment year.  To do this, please see this article.

If an employee has actually taken leave then always use the Annual Leave Taken pay code.


Annual Closedowns 

If the company is having a closedown (for example, closing for 2 weeks over Christmas) then, as this MBIE article explains, you may pay out the 8% Holiday pay for employees who have been employed for less than a year. If the employee has taken any leave hours in advance, those hours should be deducted from the payment made.

If you do so in FlexiTime, after you've finalised the pay you will also need to edit the employee (Setup > Employees) and on their Leave tab change their Next Holiday Anniversary to be the nominated date that the closedown will begin and make a note on the Employees Notes tab as to why their Holiday Anniversary was changed.  If desired, you can also set both the Gross Earnings to Date and Holidays Paid fields on the Leave tab to 0 at this time (their overall balances and entitlements remain the same whether you do this or not, but clearing these fields starts them with a clean slate for the new anniversary year).

However, we recommend using the alternative approach and recording the period as Annual Leave. It gives a clearer record of what happened, and means that the paid amounts will fall naturally into your pay periods making the tax calculation simple. 


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FlexiTime is flexible payroll software for New Zealand businesses. FlexiTime makes it easy to pay your employees accurately with great online timesheets, leave management and automated public holiday calculations.

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