Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

What happens when an employee does not return from parental leave? The purpose of the Parental Leave and Employment Protection Act 1987 (PLEPA) is to protect an employee’s employment while they are off undertaking their parental responsibilities. Sometimes the employee has every intention of returning to work and arranges their parental leave for that purpose, but sometimes they then decide not to return. If the employee does not return from parental leave what termination date should be used in payroll? If the employee is on parental leave, contacts the employer, and states they will not return, the first day they started parental leave becomes their termination date. It is not the date they advised you they would not be returning or the last day they were physically in the workplace. This is stated in Section 46 of the PLEPA. As the employee has not returned from parental leave, any entitlement earned during that leave is lost. Also, payroll will need to determine if there is any entitlement or accrual still owed that was earned prior to the employee’s termination date , now being the first day of taking parental leave. What about if the employee has worked while on parental leave? From 28 days after the baby is born up to 26 weeks, the employee can return to work for up to 64 hours of ‘keeping in touch’ days (only if the employer agrees). If the employee then decides not to return to work, the paid keeping-in-touch hours are not included in the 8% on termination because the termination date is the first day of parental leave.

For additional information, look at this EmploymentNZ reference: https://www.employment.govt.nz/leave-and-holidays/parental leave/managing-parental-leave-as-an-employer/covering parental-leave-and-employees-returning-to-work

© New Zealand Payroll Practitioners Association, Mar 2026, Ver 9

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