Pay slip leave balances

Display settings of leave accruals and leave balances

The display of pay slip leave accruals can be set at two levels:

• Payroll settings level under the pay slips menu. This setting impacts all leave categories.

• Leave category level where individual leave categories can be set to hide the accrual and/or the balance from the pay slip. This setting impacts the specific leave category where the setting is located.

• The display of pay slip leave balances can be set at one level and that is at the leave category level. This setting impacts the specific leave category where the setting is located.

Settings and associated display outcomes

Hide leave accruals for all leave categories at payroll settings level

• Payroll settings > Pay slips > Show leave accruals unticked.
• Leave categories > Specific leave category > Hide accruals from pay slips unticked.

• Accrued column not displayed for any leave category.
• Annual holidays accrued line not displayed.

Show leave accruals for all leave categories at payroll settings level

• Payroll settings > Pay slips > Show leave accruals ticked.
• Leave categories > Specific leave category > Hide accruals from pay slips unticked.

• Accrued column displayed for all leave categories.
• Annual holidays accrued line displayed.

An employee's leave year start date (LYSD) determines which pay run grants their annual holidays, sick leave and family violence leave entitlements. It is also the starting point the system uses to sum leave accrued and leave taken for pay slip leave balances.

Pay slip leave balances and pay run warnings use each employee's actual LYSD, as shown on their Leave Allowances page.

How LYSDs are set and kept consistent

• Leave Allowance Templates. A Leave Allowance Template locks the leave year settings it controls on the employee's Leave Allowances page. To change a locked setting, update the template. If an employee's settings drift out of line with their template, a warning appears on their Leave Allowances page with a link to sync them back to the template.
• Common annual holidays entitlement date. A company-wide common annual holidays entitlement date can be set on a Leave Allowance Template, as well as at business level.
• Leave year start dates export and import. Use the leave year start dates export to audit your employees' dates, and the import to bulk-update them. The exported file includes warnings that flag inconsistent data. See Data Extracts for each warning and how to fix it.
• LYSD earlier than the employee's start date. For employees with continuous service across employing entities, the LYSD can be earlier than the employee's start date. See Employing Entities.

After the 19 October 2026 release

Warnings may appear on employees' Leave Allowances pages and in the exported file where existing dates don't match an employee's settings. They are there so you can review those dates. After the release, download the leave year start dates file for each client business, review any warnings and correct inconsistent dates.

Annual holidays

Employment Hero Payroll pay slip leave balances differentiate annual holidays accrued from annual holidays entitled.

Annual holidays accrued is a financial value i.e. 8% of the employee’s gross earnings since latest annual holidays anniversary.

Annual holidays entitled represents the conversion from annual holidays accrued i.e. the financial value, to units of time i.e. 4 weeks of annual holidays.

It is important to differentiate both concepts to comply with the Holidays Acts 2003.

While many payroll platforms in NZ only allow payrollers to set annual holidays on an ongoing hourly accrual, this is not compliant with the Holidays Act 2003 which defines an annual holiday entitlement as 4 weeks. In Employment Hero Payroll, best practice is to set the leave category annual holidays to accrue in weeks based on the employee’s leave year (anniversary) so that the annual holiday accrual converts to 4 weeks of annual holidays entitled on the employee's annual leave anniversary. All screenshots below display best practice set up for the leave category annual holidays. Setting annual holidays on an ongoing hourly accrual will lead to incorrect pay slip leave balances.

Note that in all cases outlined below, Payroll settings > Pay slips > Show leave accruals is ticked.

• Hide accruals from pay slips.
  • Accrued column displayed for all leave categories.
  • Annual holidays entitled accrued displayed as N/A.
  • Annual holidays accrued not displayed.

Note that with this option, a simple calculation will enable employees to have visibility of the annual holidays entitled accrued value.

• Hide accruals from pay slips
• Hide balances from pay slips
  • Accrued column displayed for all other leave categories.
  • Annual holidays entitled not displayed.
  • Annual holidays accrued not displayed.

• Hide accruals from pay slips.
• Hide balances from pay slips
  • Accrued column displayed for all leave categories
  • Annual holidays entitled, accrued, taken and balance displayed.
  • Annual holidays accrued displayed.

For annual holidays, the following settings must also be ticked for the annual holiday accrued line to show in pay slip leave balances.

• The "Leave entitlement to start after"
• "Standard Allowance" must be set to Standard weeks per year or Standard days per year in annual holidays settings (as opposed to hourly).

Annual holidays accrued value calculation

While the legal definition of an annual holidays accrual is 8% of gross earnings since the employee’s latest annual holidays anniversary, employees may not be able to reconcile a dollar value with units of time. As a result, Employment Hero Payroll applies a calculation to estimate the annual holidays accrued value in weeks. Payrollers can refer to the leave liability report from the report menu for the exact financial value of the employee’s annual holidays accrual.

The latest annual holidays anniversary used in this calculation is the employee's leave year start date (LYSD) shown on their Leave Allowances page.

Calculated example:

Employee annual holidays anniversary: 1/12/2024

Fortnightly pay run end date: 12/01/2025

Calendar days from 01/12/24 to 12/01/25 = 43

(4 weeks entitlement / 365 calendar days) x 43 calendar days = 0.47 weeks.

As each pay run contains the same quantity of calendar days, the annual holidays accrual will increase in a linear way i.e. in the above example the annual holidays accrual will increase by (4/365)*14 calendar days = 0.1534 week with each pay run.

Annual holidays entitled value calculations

As annual holidays is anniversary-based, a new annual holidays entitled accrued value is calculated every time the employee reaches their annual leave anniversary aka leave year start date. The employee’s leave year start date is displayed in the employee leave allowances screen. Pay slip leave balances use this actual date. See Leave year start date (LYSD) for how it is set and kept consistent.

Annual holidays entitled accrued

The annual holidays entitled accrued value is the employee’s latest annual holidays entitlement at latest anniversary. This value will not be re-calculated or changed until the employee’s next annual holiday anniversary.

Annual holiday entitled taken

The annual holiday entitled taken value is the sum of annual holidays taken by the employee since her/his latest anniversary. This includes entitled annual holidays taken and annual holidays accrued aka in advance of entitlement. When annual holidays accrued i.e. in advance of entitlement is taken, it is always applied as a negative against annual holidays entitled accrued. This reconciles with the employee’s leave balances screen and is in line with the reversal of annual leave taken in advance of entitlement that will be processed on final pay when the employee is final paid with a negative annual holiday entitled balance. Therefore, the annual holidays accrued line will never show a taken value but will only ever show a positive accrued value. This is in line with the concept that an annual holiday accrual is only a financial value (which cannot be negative) until it becomes entitled when it becomes a time value (typically 4 weeks).

To best understand pay slip leave balances, payrollers should download the employee’s leave history report into excel and add a running balance column. Leave accrued always applies as a positive to the running balance (green cells from below screenshot). This includes the adjustment and carry forward at the time of anniversary. On the other hand, leave taken always applies as a negative.

In the above example, no annual holiday has been taken since the employee’s latest annual holiday anniversary. Therefore, the annual holiday entitled taken value is zero. The annual holiday entitled balance equals accrued value minus taken value.

In the above example, the employee has been taking annual holidays since his latest anniversary (06/11/2024). The sum of annual holidays taken since latest anniversary shows under the taken value.

Unpaid annual holidays of more than one week and the anniversary date

When an employee takes unpaid annual holidays of more than one week, the effect on their anniversary date depends on the unpaid annual holidays method set for the business:

• Move anniversary date. The employee's anniversary date moves to account for the unpaid period. New employees now default to this method.
• Reduce AWE divisor. The anniversary date does not move. Instead, the divisor used to calculate average weekly earnings (AWE) is reduced for the unpaid period.

For both methods, unpaid annual holidays of more than one week are now calculated more accurately. Where the anniversary date moves, it moves when the pay run is finalised and reverts if the pay run is unfinalised. The employee's leave year start date, and the pay slip leave balances that use it, update accordingly.

Impact of incorrect set up of annual holidays on pay slip leave balances

When the leave category annual holidays is set up to accrue ongoing hourly as per below screenshot, the leave category is no longer anniversary-based and therefore, the system loses the concept of entitled Vs. accrued which is fundamental to the Holidays Act 2003. This leads to a non-compliant set up and incorrect pay slip leave balances.

When annual holidays is set up to accrue on an ongoing basis, the system will follow the rules of calculation of all other leave categories. It will sum ALL annual leave accruals and ALL annual holidays taken from the employee’s leave year start date stated in the employee’s leave allowances. The balance will be the difference of both values.

All other leave categories

We will use sick leave as an example. All leave categories other than annual holidays will follow the same logic.

Note that in all cases outlined below, Payroll settings > Pay slips > Show leave accruals is ticked.

• Hide accruals from pay slips.
  • Accrued column displayed for all leave categories.
  • Sick leave entitled accrued displays N/A.

Note that with this option, a simple calculation will enable employees to have visibility of the sick leave accrued value.

• Hide accruals from pay slips.
• Hide balances from pay slips
  • Accrued column displayed for all other leave categories.
  • Sick leave not displayed.

All other leave categories value calculations

The accrued value for all other leave categories is the sum of all leave accrued since the employee’s leave year start date for the specific leave category.

The taken value for all other leave categories is the sum of all leave taken since the employee’s leave year start date for the specific leave category.

The balance is the difference between the accrued and the taken values.

The same auditing process can be used for all other leave categories as for annual holidays i.e. download the employee’s leave history report in excel. Sum all leave accrued and all leave taken from the employee's leave year start date for the leave category. The difference of both outcomes will yield the balance.

Note that the employee leave year start date can be set as:

• Their start date i.e. one leave year start date for all leave categories.
• A specified leave year start date other than the employee’s start date i.e. one leave year start date for all leave categories. For employees with continuous service across employing entities, this date can be earlier than the employee's start date.
• Leave category specific leave year start dates i.e. several leave year start dates each specific to one single leave category.

Where a Leave Allowance Template controls these settings, they are locked on the employee's Leave Allowances page. To change them, update the template or sync the employee back to it.

As the employee’s leave year start date is the starting point for the system to sum leave accrued and taken, it is crucial to take note of the employee’s leave year start date(s) in the employee’s leave allowances when reconciling pay slip leave balances with the employee’s leave history. To audit dates across a business, use the leave year start dates export. See Leave year start date (LYSD).