This article explains the optimised ADP calculation on the payroll platform and how it fits the legal definition of ADP as per section 9.A of the Holidays Act 2003. Please note that all screenshots taken from the payroll platform shown in this article are from a fictive New Zealand business.
Getting started
Please refer to this page from the Holidays Act 2003.
a. ADP 52-week gross earnings
Earnings processed with pay categories that are not ticked to be excluded from average weekly earnings.
b. ADP days paid
A new include in ADP days paid setting is now available under each pay category.
Navigate to payroll settings pay categories. Click on the pay category name to expand its settings.
The screenshot below illustrates a pay category where earnings will accumulate both into a. 52-week gross earnings and b. ADP days paid for this same 52-week period.
System pay categories cannot be amended and will come with the following default ADP-related settings.
Note that while the setting cannot be changed for system pay categories, payrollers can view the ADP days paid setting.
If the pay category is set to:
- a unit that is not fixed i.e. a unit that is hourly, daily, weekly, monthly or annually and
- Accrues leave,
Then these pay categories will be ticked to be included in ADP days paid.
From this point forward, the Accrues leave setting is no longer relevant in the NZ payroll landscape. This setting (Accrues leave) determines whether or not leave hours accrue on any hours paid against the pay category where the leave category uses an “hours per hours worked” accrual method. This accrual method is currently not used in the NZ legislation.
Note that the ADP calculation generates accurate outcomes where the pay category unit is fixed or hourly. Daily, weekly and monthly units will be part of a future optimisation.
Use the pay categories data extract from payroll settings > data extract > pay categories.xls to review your pay categories settings.
There will be a future optimisation to allow payrollers to update their pay categories’ ADP days paid setting in bulk via file import.
ADP period end date: The day before the pay run start date where leave is taken and ADP is calculated.
ADP period start date: 52 calendar weeks into the past from ADP period end date.
Where to find the ADP period start date on the payroll platform?
In a pay run, click the i icon on the right of the leave rate field.
This will bring up the leave calculation context panel. The ADP period start date can be found on the Annual earnings line as per below screenshot.
The ADP period start date is also stated in the leave rate calculation workbook as indicated in the below screenshot.
Note that this is currently available for sick and alternative leave and will soon be available for public holiday.
How the ADP days paid calculations works
We will break down ADP days paid calculations in two parts:
ADP Days Paid General Rules of Calculations
The system looks at finalised pay runs when calculating ADP days paid.
The system looks at remunerated hours when calculating ADP days paid.
Earnings must be processed under a pay category which is ticked incl. in ADP days paid and NOT ticked excluded from AWE.
The system looks at earnings from all pay categories and not only the employee’s primary pay category.
Pay categories with units hourly and fixed are included in ADP days paid. Daily, weekly and monthly units will be part of a future optimisation.
Historical gross earnings pay period days are days paid and do/should not include unpaid days.
Manual earnings and manual leave are NOT best practice. For all employee set ups, best practice is to process leave in a leave request. Whether the leave request is best applied to a timesheet or directly to the pay run will depend on the employee set up specific best practice (see below for further details). For employees on set ups 1- and 2-, manual earnings and leave will generate ADP days paid as per these set ups’ basic ADP days paid calculations. For all other employee set ups, no ADP days paid are generated from manual earnings and leave.
Rounding rules: For employees on monthly schedules, rounding is completed as follows:
- Sum historical gross earnings days paid as decimals and record outcome as decimal.
- Sum annual earnings days paid as decimals and record outcome as decimal.
- Sum historical gross earnings days paid decimal + annual earnings days paid decimals and round the outcome (total ADP days paid) to the next higher whole number.
ADP Days Paid Rules of Calculations by Employee Setup
ADP days paid calculations will depend on how an employee is set up. We define employee set ups by their work week, whether default earnings apply and how timesheets are enabled.
|
Employee set up |
Week set up | Default earnings | Timesheet setting |
| 1 | Standard basic | Y | Do not use timesheets. |
| 2 | Standard basic | Y | Use timesheets for exceptions only (e.g. overtime). |
| 3 | Standard basic | Use timesheets to submit all time worked. | |
| 4 | Standard advanced | Y | Do not use timesheets. |
| 5 | Standard advanced | Y | Use timesheets for exceptions only (e.g. overtime). |
| 6 | Standard advanced | Use timesheets to submit all time worked. | |
| 7 | Irregular employee | Use timesheets to submit all time worked. | |
| 8 | Casual employee | Use timesheets to submit all time worked. | |
| 9 | Piecemeal employe | Use timesheets to submit all time worked. |
Employees on a standard basic work week are always on a 5-working day week where Monday to Friday are otherwise working days and where Saturday and Sunday are not otherwise working days. Any other work week should be set up as a standard advanced work week.
As a result, employees’ hours per week stated in their pay run defaults should always be a multiple of 5 where the hours per day value x 5 equal the hours per week value.
Basic ADP days paid calculation for employee set up 1: ADP days paid of a pay period = Sum quantity hours of default earnings in the finalised pay run including paid leave / employee standard daily hours.
Note that the employee standard daily hours is calculated as employee pay run defaults hours per week / 5 working days and does not refer to the hours per day field in the employee’s pay run defaults.
Under this set up, employees submit timesheets by exception for additional hours worked outside their normal work hours set in their basic work week.
Basic ADP days paid calculation for employee set up 2: ADP days paid of a pay period = Sum quantity hours of default earnings in the finalised pay run including paid leave / employee standard daily hours + timesheet dates on a non OWD.
Timesheets for additional hours
When a timesheet by exception is imported in the pay run, the system will check the employee’s basic work week and establish whether the timesheet date falls on an OWD or not. If the timesheet date falls on an OWD, then no additional ADP day paid will be generated. If the timesheet date does not fall on an OWD, then an additional ADP day paid will be generated.
Part days paid on non OWD: A timesheet processed on a non OWD will generate one ADP day paid regardless of the quantity of hours processed.
Multiple timesheets for the same date which falls on a non OWD will generate one single additional ADP day paid and will not duplicate ADP days paid for this particular date.
Timesheets for Public holiday worked will generate one ADP day paid as default earnings are reversed when a public holiday falls in a pay run (public holiday automation for employees on default earnings).
For all employee set ups, the system will check for existing ADP days paid dates across all finalised pay runs and not just in one single pay run. E.g.:
- Pay run 1: The employee’s regular pay is processed including default earnings on Mon 03/03/2025: 1 ADP day paid.
- Pay run 2: A one off pay run is processed with additional earnings processed on a timesheet for Mon 03/03/2025: No additional ADP day paid generated as the system has already recorded one ADP day paid for Mon 03/03/2025 in pay run 1.
Leave requests should be applied to pay runs as opposed to timesheets as only additional hours worked should be processed on timesheets for this employee set up.
Under this set up, employees have a standard basic work week but their employer requires that they submit timesheets for all time worked and paid leave.
Basic ADP days paid calculation for employee set up 3: Count remunerated timesheet dates for time worked and paid leave + leave request dates when leave requests are applied directly to pay run.
Timesheet rules as per employee set up 2 apply except Timesheets for Public Holiday worked.
Split worked/leave days
When an employee takes leave for part of a day and works for the other part of the day, the system needs to know how days are split i.e. which part day worked fits with which paid or unpaid part leave day. To do so, payrollers should:
- Apply the leave request to a timesheet so that the system knows how many leave hours fit into which specific dates, or
- If the leave request is applied directly to the pay run, the part day of leave taken should be processed in one single leave request.
- Example: The employee works Monday morning then goes on paid or unpaid leave from Monday lunch time to Thursday. The payroller can process one single leave request from Monday 12PM to Thursday 5PM and apply the leave request to a timesheet. Or the payroller can create a single leave request for 0.5 day for Monday afternoon and another leave request for Tuesday to Thursday.
Under this set up, employees:
- have more or less than 5 OWDs in their work week or/and
- have gaps in their work week e.g. Mon-Tues and Thurs-Fri, and/or
- are working on non OWD as per the business work week e.g. Saturdays or/and Sundays where the business work week is Monday – Sunday.
Basic ADP days paid calculation for employee set up 4: Count remunerated dates as per standard advanced work week.
Split worked/leave days best practice as per employee set up 3 per applies.
Monthly averaged pay schedules
Deleted defaults earnings lines
If a default earnings line is deleted from a pay run, no ADP day paid will be generated for the deleted date. This practice leaves no audit trail. As an alternative, LWOP should be processed in a leave request to leave an audit trail.
As with employee set up 2-, under this set up, employees submit timesheets by exception for additional hours worked outside their normal working hours set in their advanced work week.
Basic ADP days paid calculation for employee set up 5: Count remunerated dates as per advanced work week + timesheet dates on non OWD.
Timesheet rules as per employee set up 2 apply except Timesheets for Public Holiday worked.
Split worked/leave days best practice as per employee set up 3 applies.
Leave requests should be applied to pay runs as opposed to timesheets as only additional hours worked should be processed on timesheets for this employee set up.
Under this set up, employees have a standard advanced work week but their employer requires that they submit timesheets for all time worked and paid leave.
Basic ADP days paid calculation for employee set up 6: Count remunerated timesheet dates for time worked and paid leave + leave request dates when leave requests are applied directly to pay run.
Timesheet rules as per employee set up 2 apply except Timesheets for Public Holiday worked.
Split worked/leave days best practice as per employee set up 3 applies.
Under this set up, employees are ticked irregular employment in their pay run defaults. Therefore, the system no longer looks at the work week stated in the employee’s pay run defaults as it calculates new irregular data points when each pay run is processed (irregular value of a day, irregular value of a week, etc…).
Irregular employees should be processed as per irregular employment best practices. This includes processing all time worked in timesheets and applying leave requests directly to pay runs as opposed to timesheets.
Basic ADP days paid calculation for employee set up 7: Count remunerated timesheet dates for time worked + leave request dates from leave requests applied directly to pay run.
Timesheet rules as per employee set up 2 apply except Timesheets for Public Holiday worked.
Split worked/leave days best practice as per employee set up 3 applies.
Casual employees may have a standard basic or advanced work week stated in their pay run defaults. However, by definition, casual employees do not have a standard work week. Therefore, all time worked should be processed on timesheets. Leave should be processed in leave requests which can be applied to timesheets or directly to pay runs.
Basic ADP days paid calculation for employee set up 8: Count remunerated timesheet dates for time worked and paid leave + leave request dates when leave requests are applied directly to pay run.
Timesheet rules as per employee set up 2 apply except Timesheets for Public Holiday worked.
Split worked/leave days best practice as per employee set up 3 applies.
Under this set up, employees are remunerated with fixed unit pay categories. Typically, piecemeal employees will submit timesheets for all time worked as their productivity is likely to fluctuate from day to day.
Basic ADP days paid rules of calculation for employee set up 9: Count remunerated timesheet dates for time worked and paid leave + leave request dates when leave requests are applied directly to pay run.
Timesheet rules as per employee set up 2 apply except Timesheets for Public Holiday worked.
Split worked/leave days best practice as per employee set up 3 applies.