Termination Essentials

NZPPA Certificate in Payroll Termination Essentials (Level 4)

The calculation for annual holiday entitlement paid out on termination earned while on ACC

How calculated in payroll:

Any annual holiday entitlement earned while in ACC is still calculated based on the greater of (Section 24 of the Holidays Act):

• Average Weekly Earnings (AWE), and

Ordinary weekly pay (OWP)

•

The normal question raised in this situation is that the employee has not been working, so will they get any money from the leave being paid out?

• If the employee has not worked (or received top-ups from the employee in the last 12 months then AWE would be zero, BUT

• OWP is based on the agreed week from the employee employment agreement, and this is where they would get value from, and this then needs to be included in the 8% on termination.

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

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