NZPPA Holidays Act 2003 Special Payroll Pre Audit

  • Get a handle if you have an issue with the Holidays Act 2003!

You may have seen the issues with the Holidays Act 2003 has been in the news a lot recently. This is a misconception as NZPPA has been dealing with issues with the act since NZPPA was formed in 2007. So the problems with the act are an on-going issue not a new recent development.

Please understand there have been statements made in the media that infer that all payroll systems are non-compliant, this is rubbish!!! They have been made by people that do not understand the actual issues that impact on payroll overall in regard to the Holidays Act 2003.

There are many factors that can make your payroll non-compliant with this act such as but not limited to: the payroll system you are using, how the system was set up, the payroll processes outside of the system, how the payroll system has been used and what decisions the business has taken in following the act from a business perspective. Just one of these factors could have made your system non-compliant.

So what is the potential risk if you get leave calculations wrong under the Holidays Act 2003?

Well there could be a substantial financial risk to the business based on:

  • The difference of what was paid to what was not?
  • Interest on the shortfall not paid (Awarded by the ER Authority).
  • Multiply that by the number of staff effected.
  • Multiply that by 6 years (potential claim under the ERA).
  • And add any fines or legal fees on top.

If you do think you have issues with the Holidays Act 2003 this will not go away you need to resolve this NOW!

What is the purpose of the NZPPA Holidays Act 2003 Special Payroll Pre Audit?

NZPPA wanted to give employers and payroll practitioners some peace of mind in what they are doing in regard to the Holidays Act 2003.

The aim of the pre audit is to allow you to state what you are currently doing in relation to the act and to get feedback if there are any potential issues with your current practice, setup and application of the Holidays Act in your payroll.

What will be provided for the cost of this pre audit activity?

  • NZPPA pre audit questionnaire that you complete and return (via email).
  • We will support you (if needed) in completing the questionnaire if you have any questions on what is needed to answer it fully so an assessment can be made.
  • Based on what you provide in the completed questionnaire NZPPA will follow up with additional questions (if needed).
  • NZPPA will assess the completed questionnaire and provide a basic summary report on, if there are issues that need to be followed up in your payroll by clearly stating “Why NZPPA believes there are issues” referencing back to the Holidays Act and other resources (if applicable).
  • Based on the information provided if no issues are identified NZPPA will state “Why based on the information provided NZPPA believes there are no present issues” with how you are calculating and managing the Holidays Act 2003.

Scope of pre audit activity:

  • Questions on all calculations undertaken for paid leave under the Holidays Act 2003: Average Weekly Earnings (AWE), Ordinary Weekly Pay (OWP), 8%, Relevant Daily Pay (RDP) and Average Daily Pay (ADP).
  • What payments being made to an employee that are included or excluded in Holidays Act 2003 calculations, such as: Bonuses, taxable allowances, reimbursing allowance, travel allowances etc.
  • How payroll is calculating annual holidays when the employee returns from a period of parental leave.
  • How annual holiday payments are taxed (for IRD purposes).
  • The general rules in how leave provided under the act is earned, provided and taken by an employee.
  • NZPPA will also comment on any specific areas of the Holidays Act that you have identified as a potential issue in your payroll.

What the audit does not cover:

  • Multiple payrolls (NZPPA can give additional discounts if there is more than one payroll to pre audit).
  • Analysis of data provided from your payroll.
  • Payroll policy, processes in regard to the Holidays Act 2003.
  • Full recommendations and actions needed to resolve any Holidays Act non-compliance.
  • Any other legislation that applies to payroll (other than parental leave in relation to annual holidays taken and the taxing of paid leave under the act).
Please note: An NZPPA audit or any audit carried out by any other organisation cannot protect you from MBIE doing an audit and applying their own interpretation to your payroll. The aim of the audit is to highlight areas not consistent with the Holidays Act 2003 only.


Timeframe for pre audit completion: Once all questions have been fully answered including follow up questions the audit report will be provided within 14 days (via email).

Please note: Any information supplied to NZPPA will be confidential in nature and will not be provided to any third party.

If you want to proceed to a full NZPPA audit the cost of the pre audit will be taken from the full audit cost.

Any questions please contact: [email protected]

To book your pre audit or find out about NZPPA conducting a full payroll audit go to the NZPPA website and select the button on the left “NZPPA Payroll Audit Services” or email: [email protected]

Member Price: NZ$575.00 + GST
Non-member Price: NZ$1,150.00 + GST

If you are an NZPPA Member, logon to get member pricing