I haven't taken any annual leave, so why has my leave balance changed?

Firstly, rest assured that PayHero tracks your Annual Leave balance correctly. To be compliant with the Holidays Act, we keep your leave balance in weeks.

When we show you the balance, we convert the weeks balance into days. To do this, we use your agreed work pattern or, for variable employees, your recent work pattern (e.g. the average over the last 8 weeks, or a period of your employer's choosing).

If your work pattern changes, then your leave balance in days will also change.

As an example, let's say you have 4 weeks annual leave, having passed your first employment anniversary. You have been working 4 days per week for that first year. Your balance in days at this stage would be 4 weeks x 4 days per week, which is 16 days.

If you agree with your employer to change your work pattern to 5 days per week, your balance in days will immediately change. You still have 4 weeks of leave, but now at 5 days per week, which is 20 days.

Even if you don't formally agree with your employer to increase the days worked, but your rostered days increase for a period of time, say over the previous 4 weeks, your leave balance may increase because of the newly emerging work pattern.

This is the correct way that annual leave works, based on New Zealand legislation. The Holidays Act does not explicitly allow for the entitlement to be considered in units other than a week, so storing leave in weeks is the most compliant way to manage leave balances.

A few other points to note are -

1. In this example, the dollar value of your leave balance also increases, because your weekly pay has increased with the additional hours worked. Employers must ensure they understand that increasing employee work patterns increases the amount owed to their employees.
2. It generally works both ways, i.e. if your work pattern decreases, the days and total dollar value of annual leave drops. However, because the weekly rate for annual leave is the higher of the averages over the last 52 weeks or the last 4 weeks, it takes a lot longer for the weekly rate to drop than to increase.
3. Although the number of days you can take will reduce if your work pattern reduces, you'll generally be paid more than normal for a day of leave if it's taken soon after your work pattern changes. This is because your weekly rates are divided by your current work days when calculating how much a day of leave is worth.