Payroll compliance audit · Holidays Act 2003 and Employment Leave Act 2026
Is your payroll compliant, and can you prove it?
We check every employee, every pay line and every leave transaction against the Holidays Act 2003, and tell you how ready you are for the Employment Leave Act 2026. Names, dates of birth, IRD numbers and addresses never leave your business.
Who needs a payroll compliance audit
- Employers with variable hours, shifts, overtime, commission or allowances, where holiday pay most often goes wrong.
- Finance and HR leads who need to know their exposure before the Employment Leave Act 2026 arrives.
- Boards and audit committees that want independent assurance on payroll, not the payroll provider’s word for it.
- Businesses that have changed payroll systems, or are about to.
What we check
Annual holidays rate
Annual holiday pay at the greater of ordinary weekly pay and average weekly earnings, for every period of leave taken or paid out.
Holidays Act 2003, section 21 (opens in a new tab), section 8 (opens in a new tab)
Gross earnings components
What goes into gross earnings and what stays out: overtime, commission, taxable allowances and bonuses, and whether payroll classified each one correctly.
Holidays Act 2003, section 14 (opens in a new tab)
Otherwise working days and public holidays
Whether each public holiday fell on a day the employee would otherwise have worked, whether they were paid for it, and whether time worked on it was paid at time and a half.
Holidays Act 2003, section 12 (opens in a new tab), section 49 (opens in a new tab), section 50 (opens in a new tab)
Alternative holidays
Whether a day in lieu was granted for each public holiday worked on an otherwise working day, and how it was later taken or paid out.
Holidays Act 2003, section 56 (opens in a new tab), section 60 (opens in a new tab)
Sick and bereavement leave rates
Whether sick and bereavement leave were paid at relevant daily pay or average daily pay, including the overtime the employee would have worked.
Holidays Act 2003, section 71 (opens in a new tab), section 9 (opens in a new tab), section 9A (opens in a new tab)
Pay-as-you-go 8%
Whether holiday pay paid as 8% with each pay is used only where the Act allows it: a fixed term under 12 months, or work so intermittent or irregular that four weeks’ leave is impracticable.
Holidays Act 2003, section 28 (opens in a new tab)
Termination pay
Whether final pays include untaken annual holidays at the right rate, 8% of gross earnings since the last anniversary, and public holidays that fall in the notional leave period.
Holidays Act 2003, section 24 (opens in a new tab), section 25 (opens in a new tab), section 40 (opens in a new tab)
Record keeping
Whether your holiday and leave records hold what the Act requires for each employee, including hours worked each day and the date annual leave was last due.
Holidays Act 2003, section 81 (opens in a new tab)
Employment Leave Act 2026 readiness
Whether your payroll data and set-up can move to leave accrued in hours, one leave payment rate, and the leave compensation payment for casual and additional hours.
Employment Leave Act 2026, section 24 (opens in a new tab), section 118 (opens in a new tab), section 126 (opens in a new tab)
The law is changing
The Employment Leave Act 2026 is coming
The Employment Leave Act 2026 comes into force on 6 August 2028 and every employer must transition. Each employee moves across at the start of their first pay period on or after that date. Until then the Holidays Act 2003 still applies, so both need checking now.
- 6 August 2028
- The Employment Leave Act 2026 comes into force and replaces the Holidays Act 2003. It cannot be adopted early: the Holidays Act applies until then.Source: Employment New Zealand, 2026 (opens in a new tab)
- Every employer
- must transition. Leave will accrue in hours, one hourly rate will apply to all leave, casual and additional hours earn a 12.5% leave compensation payment, and public holidays get a new “otherwise working day” test.Sources: NEWS WIRE, 2026 (opens in a new tab)1News, 2026 (opens in a new tab)
- One more year
- after commencement for employers to bring employment agreements into line.Source: Buddle Findlay, 2026 (opens in a new tab)
- Six years
- of past Holidays Act non-compliance can be settled through an optional remediation process. Repeal does not wipe historic liabilities.Sources: Buddle Findlay, 2026 (opens in a new tab)NEWS WIRE, 2026 (opens in a new tab)
Employment Leave Act 2026, section 2 (commencement) (opens in a new tab), section 24 (annual leave accrual) (opens in a new tab), section 126 (leave compensation payment) (opens in a new tab), section 150 (repeal of the Holidays Act) (opens in a new tab)
How it works: extract, scrub, send, report
Extract
Your payroll administrator exports the standard reports from your payroll system: employees, pay lines, timesheets, leave taken and leave balances, for the period we agree.
Scrub
A short script we give you runs on your own computer. It swaps each name for a code such as EMP-01 and removes dates of birth, IRD numbers, addresses, bank accounts and contact details. It also writes a key file that matches codes to people. The key stays with you.
Send
You send us the scrubbed workbook and nothing else. Names, dates of birth, IRD numbers and addresses never leave your business.
Report
The engine checks every employee against both Acts. We read every finding and send you the report by code. Your key turns the codes back into names, on your side.
What you get
- The answer first: how many employees failed the Holidays Act check, and how many failed the Employment Leave Act readiness check.
- A breakdown by rule and by employee, with an estimate of any underpayment.
- Each finding with its working: the inputs, the calculation steps and the section of the Act it rests on.
- A plain-English fix list, in priority order.
- A walkthrough call with both of us.
Guides
Read the law first
Employment Leave Act 2026
What changes on 6 August 2028, who is affected, how leave balances convert to hours, and a readiness checklist.
Holidays Act compliance check
A five-point self-check, the most common Holidays Act errors, and what a full review looks at.
Holiday pay calculation
Ordinary weekly pay vs average weekly earnings, daily pay, otherwise working days, 8% and final pay, with worked examples.
Talk to us about an audit
A short call to scope it. A fixed fee before we start. A fraction of a Big Four engagement, in days not months.