Leave Pay Calculation Methods

To ensure compliance with the New Zealand Holiday Act, you must set up the system to calculate employee leave pay rates. Different types of leave pay require different calculations.

According to NZHA regulations, annual holiday leave must be paid at the greater of these rates:

Ordinary weekly pay rate by hour.
Average weekly earnings rate by hour.

For Sick, bereavement, and public holiday leave an employee is entitled to be paid either relevant daily pay or average daily.

The system uses the Calculate Holiday Leave Pay Rate business function (B75Z0009) to calculate the employee's average weekly earnings rate by hour. To specify how the system calculates ordinary weekly pay and relevant daily pay rates, you must set up the processing options for the New Zealand Processing Options program (P75Z002A). When you set the processing options, you can select either the hierarchy or formula method for each type of pay rate.

If you set up special rates to calculate the relevant daily rates for any employees, you must use the hierarchy method to derive the relevant daily rate. Similarly, if you set up special rates to calculate ordinary weekly rates, you must also use the hierarchy method to derive the ordinary weekly pay rate. If you do not use special rates, you can select either the hierarchy or the formula method. The formula method overrides if there is no special rate.

If you use the formula method, the system uses the Calculate Holiday Leave Pay Rate business function to perform all of the pay rate calculations.

Note:

When you set the processing options for the New Zealand Processing Options program, you must use a version that has the same name as the Time Entry MBF Processing Options program (P050002A) that you use to calculate timecards in the system. You enter the version of the Time Entry MBF Processing Options program in the processing options for the Speed Time Entry program (P051121) and the Time Entry Floods program (P051191).

For example, if you use version ZJDE0001 of the Time Entry MBF Processing Options program, and enter that version name in the processing options of the Speed Time Entry and Time Entry Floods programs, you must set up the processing options for the New Zealand Processing Options program using version ZJDE0001. If the version names of the Time Entry MBF Processing Options program and New Zealand Processing Options program do not match, the system will not calculate leave pay correctly.

This table illustrates how the system calculates the pay rate for each type of leave using both the hierarchy and formula methods:

Leave Type and Method	System Calculation Process
Annual Holiday Leave - Hierarchy Method	The system performs these steps to derive the employee's pay rate: If the value in the Description 2 field of UDC 75/LT is equal to ANN for the pay type on the employee's timecard, the system uses the special rate that is entered in the hierarchy method. If a rate is not found for the employee, then the system defaults the formula method.
Annual Holiday Leave - Formula Method	The system performs these steps to derive the employee's pay rate: If the value in the Description 2 field of UDC 75/LT is equal to ANN for the pay type on the employee's timecard, the system calculates the rate for annual holiday leave. The system calculates the employee's ordinary weekly pay rate by hour using the formula, as defined by B75Z0009. The system calculates the employee's average weekly earnings rate by hour using the formula, as defined by B75Z0009. The system compares the ordinary weekly pay rate by hour and the average weekly pay rate by hour, and assigns the greater of the two values to the employee's leave timecard.
Sick, Bereavement, and Public Holiday Leave - Hierarchy Method	The system performs these steps to derive the employee's pay rate: If the value in the Description 2 field of UDC 75/LT is equal to OTH for the pay type on the employee's timecard, the system uses the special rate that is entered in the hierarchy application. If a rate is not found for the employee, then the system defaults the formula method.
Sick, Bereavement, and Public Holiday Leave - Formula Method	The system performs these steps to derive the employee's pay rate: If the value in the Description 2 field of UDC 75/LT is equal to OTH for the pay type on the employee's timecard, the system calculates the rate for sick, bereavement or public holiday types of leave. The system calculates the employee's relevant daily pay from an average over the last 52 weeks. If the employee has less than 52 weeks history, the average is based on actual weeks worked.