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Improvements to employee leave in New Zealand payroll

Posted 3 years ago in Product by Sukesh Elati
Posted by Sukesh Elati

We’re bringing some exciting changes to New Zealand payroll to make it easier for you to process leave. With this update:

  • You can set up payroll to show annual leave an employee can take in advance of becoming entitled to it.
  • When you set up a new employee in payroll, or make changes to an existing employee’s working hours, Xero will automatically calculate their annual leave entitlement.

Changes to how the annual leave balance is displayed

The biggest addition in this update is that you can now set up an employee’s annual leave balance to display the amount of leave they can take in advance.

An employee who previously had no leave in their balance, for instance, might now have some leave available — this is their ‘leave available to take in advance.’

To make it easy for you, this new feature is enabled by default for all new employees you set up in payroll. You can easily switch it on for existing employees:

  1. From Payroll, select Employees and choose an existing employee.
  2. Navigate to the Leave tab and click on Annual Leave balance.
  3. Tick the box to Include leave available to take in advance in the balance and Save.

Once you’ve turned this option on, your employees’ annual leave balances – including leave available in advance – will show on their payslips in the employee portal and Xero Me mobile app. To keep things simple, only payroll admins will now see holiday pay balance in dollars when this option is turned on.

edit leave payroll nz

Automatic calculation of hours accrued annually

You no longer have to manually enter hours accrued annually for employees. It’s automatically calculated based on their weekly hours multiplied by half their holiday pay percentage.

For employees who aren’t subject to the Holidays Act — such as business owners who pay themselves — you can set the holiday pay percentage to zero and they won’t accrue annual leave.

Need help managing your payroll? Find a Xero-certified accountant or a bookkeeper.


Bruce Nimon
September 2, 2016 at 4.45 pm

when i have done this an employee has had 88 annual leave hours accrued disappear. Any ideas?

Roger Thomas
September 4, 2016 at 5.44 pm

Until Xero Payroll allows the very simple option of recording the annual leave balance for each employee in dollars (accrued at 8% of gross) and paid out in dollars (calculated at the average hourly rate times the time taken) it’s just too complicated a payroll for most small businesses in NZ.

Sukesh Elati
September 6, 2016 at 11.38 am

@Bruce: I see you have also commented on the community to which my colleague has replied already. Did you mean holiday pay ?

@Roger: We would like to reach out to you to know more details about your enquiry. Please share your contact details and we will be in touch.

Natalie Ward
September 6, 2016 at 2.28 pm

I have added this option to all staff and the accrued balance continues to show zero. Am I missing something here?

Ash Maple
December 19, 2016 at 4.01 pm

I’m confused by what Roger has said because i have my employees setup with getting holiday pay at 8% of gross earnings? – i do however also have them getting annual leave at an accrued annual amount based on their contracts/weekly shifts…

is this correct? I was under the impression the holiday pay turns into the annual leave after 12 months? or have i setup 2 types of holiday pay for my employees (lucky them)

it seems exceptionally complicated for something that should be really, really easy.

July 24, 2017 at 9.18 pm

I am also having issues understanding Xero payroll hours and holiday accumulated. After 6 months on the job, the employee goes from 80hours, then 88, then 104, then 112… it increases 8hrs, and sometimes 12hrs. Plus i need to understand how the $ of holidays come about too, it does not add up on my maths.

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