Annual Leave Rates

This section provides information about how much leave is being taken in weeks, based on the Leave Days submitted.

Leave Days/Hours - The number of days leave being taken. This is calculated from the leave request or entered manually in the draft pay.

Note: For employees whose Work Pattern is set to No Regular Days, this will be Leave Hours instead.

Days Per Week - The days per week the employee currently works. This will be dictated by the employee's Work Pattern. For employees set to No Regular Week, this will be calculated from their average days per week from their recent work history, based on your company Review Period.

Note: For employees whose Work Pattern is set to No Regular Days, this will be Hours Per Week instead.

Leave Weeks - The total amount of leave that will be deducted from the employee's leave balance in weeks. This employee is taking 2 days of leave and works 5 days per week, so they're taking 0.4 weeks of leave (2 / 5 = 0.4).

This section provides information about how the Ordinary Weekly Pay is calculated and how it's converted into a daily rate.

Earnings - The total gross earnings this employee has received in the last 4 weeks (or since they started if their start date is in the last 4 weeks). This value should exclude any earnings that are not paid regularly, for example, quarterly bonuses or discretionary payments. 

Weekly Rate - The employee's Ordinary Weekly Rate, calculated by dividing the earnings by 4 (or the number of weeks since they started).

Daily Rate - The Ordinary Weekly Pay per Day, calculated by dividing the Weekly Rate by the number of days per week the employee is currently working (see above).

Note: For employees whose Work Pattern is set to No Regular Days, this will be divided by the Hours Per Week instead.

This section provides information about how the Average Weekly Pay is calculated and how it's converted into a daily rate.

Earnings - The total gross earnings this employee has received in the last 52 weeks (or since they started if their start date is in the last 52 weeks - we can see that this employee started 10 weeks ago). This value should exclude any reimbursements or discretionary payments. 

Weekly Rate - The employee's Average Weekly Rate, calculated by dividing the earnings by 52 (or the number of weeks since they started).

Daily Rate - The Average Weekly Pay per Day, calculated by dividing the Weekly Rate by the number of days per week the employee is currently working - see the Leave Taken section above.

Note: For employees whose Work Pattern is set to No Regular Days, this will be divided by the Hours Per Week instead.

This section provides information about how the Normal Daily Pay is calculated. For employees whose Work Pattern is set to No Regular Days, this will be their Normal Hourly Rate instead. 

Hours per Day - The hours per day the employee currently works. This will be dictated by the employee's Work Pattern. For employees without hours per day specified, this will be calculated from their average hours per day from their recent work history, based on your company Review Period.

Normal Rate - The employee's normal hourly rate.

Daily Rate - The Normal Daily Pay, calculated by multiplying the hours per day by the normal rate. For employees who don't have set hours per day, this figure is an estimate only.

PayHero will do its best to apply the appropriate rate based on the employee's settings and earnings history. If you need to manually select a rate, the general rules to follow are:

1. If the Average Weekly Pay is the highest rate, it should always be used.
2. The Normal Daily Pay should be paid if:
   • It's higher than the Average rate, and
   • It's an accurate representation of what the employee would normally receive (including any extra payments they would regularly receive, such as overtime and commission).
3. The Ordinary Weekly Pay should be paid if:
   • It's higher than the Average rate, and
   • You don't have a clearer definition of what an 'ordinary week' looks like for the employee
4. A custom rate should be paid if:
   • You know what the employee would normally earn an ordinary week (including any extra payments they would regularly receive, such as overtime and commission), and this doesn't match any of the other rates.
   • The employee's history is incorrect, so the other rates aren't being calculated correctly. If this is the case, it's often better to correct the history so that the rates can automatically calculate for you - reach out to support@payhero.co.nz if you need assistance. 

Yes. If PayHero doesn't have enough history to calculate these leave rates, or if you disagree with the calculated rate PayHero has selected, you can change them using the units and rate dropdowns.

To select the calculated Ordinary or Average rate, set the units dropdown to 'Days' and select the appropriate rate from the rate dropdown.

To select an hourly rate of your choosing, set the units dropdown to 'Hours'. Doing so will allow you to manually set the total days, hours, and rate the leave should be paid for: 

Important: If you choose to make manual edits to the leave rate, it's essential to ensure that:

1. The new rate you select is equivalent to at least the higher of the employee's Average or Ordinary rate.
2. The total number of Days specified is accurate, as this will define how much leave is deducted from the employee's leave balance. (This doesn't apply to employees whose Work Pattern is set to No Regular Days, for whom the Days field will not appear)

For more information on Annual Leave payments see this article from MBIE.

When employees are paid monthly, the Ordinary Weekly Pay calculation will be higher than their normal weekly earnings, because a month doesn't divide cleanly into 4 weeks. Unfortunately, that's a natural side effect of the way the Holidays Act 2003 defines this calculation approach for OWP - divisible by 4 as per the MBIE's article under the Ordinary Weekly Pay formula heading:

• • go to the end of the last pay period, then from that date, go back four weeks (or if the pay period is longer than four weeks, go back the number of weeks in the pay period), and
  • take the gross earnings for that period (a), and
  • deduct from the gross earnings any one-off or irregular payments (or other payments) that the employer is not bound to pay (b), and
  • divide the answer by four.

For employees who receive variable earnings each month, this approach is the only calculation PayHero can apply.

However, if you know what they would ordinarily receive in a week, you can choose to override the rate - either to their Average rate, if that's higher, or to their normal earnings if that's higher. 

What about salaried employees with no variation?
If an employee is on salary, being paid monthly, and doesn't have any fluctuation in their earnings from month to month, then PayHero will use their normal weekly salary as the Ordinary Weekly Pay - you'll see the Normal Daily Pay rate being used in these cases, despite the Ordinary Weekly Pay calculation being higher. 

Annual Leave which falls due while an employee is on Parental Leave, or in the 12 months following Parental Leave, can be paid to the employee at their Average Rate rather than selecting the highest rate. 

If you've processed Parental Leave for any of your employees, PayHero will manage this for you - learn more here: Parental Leave