A Guide to Holiday Pay for Nannies in New Zealand

Managing holiday pay for your nanny may seem daunting at first, but ensuring compliance with New Zealand's Holidays Act is critical for families employing nannies. Holiday pay is a legal entitlement for all employees, including nannies, and getting it right helps maintain a positive employment relationship and avoid potential legal issues. 

In this guide, we will break down the ins and outs of holiday pay, including how it is calculated, managed, and how Pay The Nanny can streamline the entire process, making it simple for both families and nannies. 

Understanding the Holidays Act 2003 

The Holidays Act 2003 governs the rules for holiday entitlements in New Zealand. The key elements of the Act that apply to nanny employment include: 

• Annual Leave: Employees are entitled to four weeks of paid annual leave after 12 months of continuous employment. 

• Public Holidays: Employees are entitled to paid public holidays if they fall on a day the employee would normally work. 

• Sick Leave: After six months of continuous employment, employees are entitled to 10 days of sick leave each year. 

• Bereavement Leave: Employees are entitled to bereavement leave after six months of employment. 

Leave questions are without a doubt the biggest type of questions that we receive for Pay The Nanny from customers, so we’ve tried to outline them all in this article again in depth. 

Annual Leave Entitlements 

A nanny in New Zealand is entitled to four weeks of paid annual leave after completing 12 months of continuous service. This entitlement can be taken all at once or in portions, depending on the agreement between the employer (the family) and the nanny. 

How to Calculate Annual Leave 

Annual leave is calculated based on the nanny's ordinary weekly earnings (OWE) or average weekly earnings (AWE), whichever is higher.  

Let’s break these down: 

• Ordinary Weekly Earnings (OWE): This is the nanny’s usual weekly pay based on their standard work hours. 

• Average Weekly Earnings (AWE): This is calculated by dividing the total gross earnings over the past 12 months by 52. 

The nanny is entitled to the higher of these two amounts when taking annual leave. 

For example, if your nanny’s weekly wage is $800 (OWE) and their average earnings over the past year (including any overtime) works out to $850 (AWE), then the holiday pay rate would be $850 per week. 

Managing Annual Leave for Nannies 

While it’s easy to calculate holiday pay for a full-time nanny, it can be more complex for part-time, casual, or temporary nannies. Here’s how to manage holiday pay in these situations: 

• Part-Time Nannies: Holiday entitlements are calculated based on the part-time hours worked (their normal working pattern) so their annual leave is effectively prorated. 

• Casual or Temporary Nannies: For nannies employed on a casual or irregular basis, you can opt to pay them "pay-as-you-go" holiday pay, which is 8% of their gross earnings. This amount must be added to each payment cycle and shown separately on their payslip. 

Public Holidays

Public holidays are also an important component of holiday pay entitlements. If a nanny normally works on the day a public holiday falls and they take that day off, they are entitled to be paid at their regular daily rate. 

Key Points to Remember: 

• If a nanny works on a public holiday, they are entitled to time and a half for the hours worked, as well as an additional paid day off (a day in lieu). 

• If the public holiday falls on a day the nanny does not normally work, there is no entitlement to holiday pay for that day. 

How to Calculate Public Holiday Pay 

Public holiday pay is calculated based on the nanny’s "Relevant Daily Pay" (RDP). This is what the nanny would have earned had they worked on the public holiday, including allowances and overtime payments, if applicable. 

If they work on the public holiday, they are entitled to be paid 1.5 times their RDP, plus a day off in lieu. 

Calculating whether it is an otherwise working day can get complex, so if you aren’t sure then just touch base with our team and we’ll help guide you. 

Managing Holiday Pay for Families and Nannies 

It’s vital that families keep accurate records of their nanny's working hours, holiday accrual, and leave taken. Mistakes in calculating or managing holiday pay can lead to disputes and non-compliance with the Holidays Act. 

Best practices for managing holiday pay:

1. Track Leave Accurately: Ensure you keep a record of when your nanny accrues and takes annual leave. This includes sick leave and public holidays. 

1. Calculate Pay Correctly: Always calculate holiday pay based on the higher of the Ordinary Weekly Earnings or Average Weekly Earnings. For public holidays, use the Relevant Daily Pay method. 

1. Communicate Clearly: It’s essential to communicate holiday entitlements, public holiday work requirements, and leave policies with your nanny upfront. Set clear expectations to avoid misunderstandings. 

How Pay The Nanny Simplifies Holiday Pay 

Managing nanny payroll, especially holiday pay, can feel overwhelming for families, but Pay The Nanny takes the guesswork out of the process. Here's how we can help: 

1. Automated Leave Tracking Pay The Nanny automatically tracks your nanny's leave entitlements, including annual leave, public holidays, and sick leave. You won’t need to manually calculate when leave is due or how much holiday pay to apply, we do all the heavy lifting for you. 

1. Accurate Holiday Pay Calculations We ensure that holiday pay is calculated accurately, based on your nanny's Ordinary Weekly Earnings and Average Weekly Earnings, so you can be confident that you’re meeting all legal obligations under the Holidays Act. 

1. Compliance with the Holidays Act The system ensures full compliance with the Holidays Act, meaning you never have to worry about accidental underpayments or breaches of employment law. 

1. Pay-as-You-Go for Casual Nannies If you employ casual or temporary nannies, Pay The Nanny will automatically add the required 8% holiday pay to each payslip, ensuring transparency and compliance. It’s perfect for families who need irregular childcare but still want to meet their legal obligations. 

1. Clear, Transparent Payslips 

 We generate clear and professional payslips for your nanny, showing the breakdown of all payments, including holiday pay, leave balances, and any public holiday entitlements. This transparency helps maintain a healthy employment relationship with your nanny. 

Wrapping It Up 

Managing holiday pay for your nanny in New Zealand doesn’t have to be a headache. By understanding the basics of the Holidays Act and ensuring accurate calculations of annual leave, public holidays, and other entitlements, you can stay compliant and build a positive working relationship with your nanny. 

With Pay The Nanny, all the heavy lifting is done for you. Our payroll service takes the complexity out of managing holiday pay, allowing you to focus on what really matters—your family. From tracking leave to generating payslips, we ensure that both you and your nanny are on the same page, every step of the way. 

If you’d like to know more about how Pay The Nanny can make managing nanny payroll stress-free, get in touch with us today. We're here to help!