Employees on Extended LWOP

The Holidays Act states that an employee is entitled to a minimum of four weeks annual holiday after completing twelve months of continuous employment. Twelve months of continuous employment includes all periods where the employee was not at work, but still employed (e.g. they were away sick/on ACC or were on parental leave).

The exception to this is from the second week of any unpaid leave where the period of leave is longer than one week. In a situation where an employee takes agreed unpaid leave for more than one week, the date the employee becomes entitled to annual holidays will be extended by the number of weeks (not including the first week) that the employee is on unpaid leave. This is the default position.However, the employer and the employee can alternatively agree in writing that the unpaid leave of more than one week will be included in the twelve months of continuous service to become entitled to annual holidays. If this is the case, when calculating the employee's annual holiday pay, their total gross earnings must be divided by 52 weeks less the period of unpaid leave of over one week. As normal this would then be compared to the employee's ordinary weekly pay and the greater of these two amounts will be the employee's annual holiday pay for each week of holidays they are taking.

For Example:

If using option 1, an employee that took four weeks of unpaid leave would have to work for twelve months and three weeks before they become entitled to annual holidays. Alternatively, they could agree with their employer that they will still become entitled to annual holidays after twelve months, but their average weekly earnings will be calculated by dividing their total gross earnings for the 12 months and dividing it by 49 weeks as opposed to 52 weeks.
Time while an employee is on unpaid Sick, unpaid Bereavement, ACC, Parental or Voluntary Military Service does not affect the anniversary date for annual holiday purposes. 

Option 1

Pursuant to Section 16 of the Holidays Act 2003; subsection (2)(b) – if unpaid leave is not to be included in the 12 months of continuous service:

Salaried employees: 

• Ensure the Pay Conditions employee group (e.g. Sal 40 Hours) does not include automatic payment for Public Holidays. If so, the employee group will need to be switched to the equivalent 'No Pub Hols" group.
• If LWOP has not been added through a leave request, add the 6.2 LWOP* employee group for the duration of the LWOP. Both methods will add the LWOP component to the pay packets, however the preferred method is to use the employee group as the leave request method does not currently account for Public Holidays.
• When the employee returns from leave revert step 1 if applicable and end date the LWOP employee group.
• Shift the start date of the employee Holiday Year rule template forward by the amount of the unpaid leave less one week.  (Holidays Act 2003, Section 16(2)(vi)).
• Finally, the leave summary screen will need to be manually updated. The accrual needs to be reset to zero and any entitlement may need to be adjusted.  
  
  

 Timesheet employees:  

• Ensure the Pay Conditions employee group (e.g. T/S 40 Hours) does not include automatic payment of Public Holidays. If so, the employee group will need to be switched to the equivalent 'No Pub Hols" group.
• If LWOP has not been added through a leave request, add the 6.2 LWOP* employee group for the duration of the LWOP. Both methods will add the LWOP component to the pay packets.
• If the 6.2 LWOP* employee group method is being used, enter the number of hours to record as LWOP for each pay period within the LWOP component in the Employee Pay Components screen.
• When the employee returns from leave, end date the LWOP employee group and the Leave Hours Taken in step 3.
• Shift the start date of the employee Holiday Year rule template forward by the amount of the unpaid leave less one week.  (Holidays Act 2003, Section 16(2)(vi)).
• Finally, the leave screen will need to be manually updated. The accrual needs to be reset to zero and any entitlement may need to be adjusted.

Option 2

Pursuant to Section 16 of the Holidays Act 2003; subsection (2)(b) – if unpaid leave is to be included in the 12 months of continuous service:
In the Historic Leave Earnings screen, simply reduce the Qualifying Days, Qualifying Hours and Actual Ordinary Days figures by the amount of the LWOP for the relevant pay periods. If the leave covered a full pay period then all figures for that period will be zero.
In the example below, the employee was on LWOP from 05/06/17 to 09/07/17 for five weeks. On their return, the divisor has been reduced by four (5 weeks leave - 1 exempt week) weeks.

Note: if the employee is using the "Std Hours/last 4 weeks" or "Standard Hours" Leave Rate Option or their leave is being held in Weeks (opposed to Hours or Days), the Unpaid Absent Weeks column also needs to be populated for each week (excluding the 1 exempt week) they are on LWOP.

Before

 After