Casual Holiday Pay NZ: How the 8% Rule Works

A permanent part-time employee receives at least 4 weeks of paid annual holidays after 12 months of continuous employment. Those are four of their own working weeks, not an automatic 20 days.

If Anika regularly works Monday, Wednesday and Friday, one working week is normally those 3 days. Four weeks would commonly cover 12 working days, subject to any later change in her work pattern.

Pay as you go is an exception, not the default. It may be used where work is so irregular or intermittent that providing 4 weeks of annual holidays is impracticable, or for a genuine fixed-term agreement of less than 12 months when the legal requirements are met.

The arrangement must be recorded in the employment agreement, and the 8% payment must be identifiable. Simply raising an hourly rate and calling it “inclusive of holiday pay” does not remove the need to meet the rules.

Suppose a genuinely eligible casual worker earns $800 gross in a pay period. The pay-as-you-go amount is $800 × 8% = $64 gross, making total gross pay $864 before PAYE and any other deductions.

The payslip should let the worker identify the $800 wages and $64 holiday-pay amount. If the total is only $800 and there is no clear 8% line or explanation, ask payroll to show exactly how holiday pay was treated.

Casual work can become regular and predictable in practice. If the worker starts accepting a settled weekly pattern, it may no longer be impracticable to provide annual holidays, even if the old agreement still says “casual”.

Employment New Zealand’s example of a worker moving from occasional shifts to regular weekdays shows why payroll must review the arrangement. Pay-as-you-go payments should stop when the legal basis no longer applies, and the agreement and leave records should reflect the new pattern.

Check the stated type of employment, the actual pattern worked, the clause explaining pay-as-you-go holiday pay, and a separately identifiable 8% amount in each relevant pay record. Keep rosters and payslips if the pattern is changing.

Do not confuse 8% pay as you go with the calculation for annual holidays already entitled, or with the separate 8% component that can appear in final pay. They arise in different situations.

The KiwiTools holiday pay calculator compares Ordinary Weekly Pay with Average Weekly Earnings for annual holidays being taken. It does not decide whether someone qualifies for 8% pay as you go.

If your work is regular, use the calculator to check an annual-holiday estimate. If the dispute is whether the 8% method is lawful, compare your agreement and real roster with Employment New Zealand’s criteria or ask its employment service for help.