Addressing Holidays Act non-compliance

The Labour Inspectorate supports employers to comply with the Holidays Act 2003 through government-industry workstreams, audits and investigations, and education and information.


A number of joint industry government Payroll Sector Leadership workstreams were established during 2016 to consider how to improve compliance with the Act. This includes a leadership and governance group, and four workgroups.

News and updates

The Labour Inspectorate’s approach to supporting compliance also involves:

  • proactive and reactive audits and investigations of employers
  • education and information including guidance on how to check that an employer's payroll system complies.

Paying via payroll system

Audits and investigations

The Labour Inspectorate has defined a “payroll audit” using the following criteria:

  • the payroll audit tests if an employer has been calculating employee annual leave entitlements and payments for BAPS leave (bereavement leave, alternative holiday, public holidays and sick leave) in a manner that is compliant with the Holidays Act 2003
  • the organisation has/had at least 20 employees, and
  • the payroll system is/was electronic.

Payroll Audit update as at 30 June 2020

Jul 2012 – Jun 2020
Cases categorised as “Payroll audit” 241
incl 101 proactive
Completed audits 201
incl 89 proactive

Of the completed audits

Jul 2012 – Jun 2020
Cases where one or more compliance tool applied
NB. It is possible for multiple tools to be used in respect of one case
Enforceable Undertaking 171
Improvement Notice 42
Referral to the Employment Relations Authority 5
Record of Settlement 2
Voluntary compliance 6

As shown above, one or more compliance tool(s) has been applied in respect of 187 of the 201 completed payroll audit cases. The remaining cases are still under consideration by the Labour Inspectorate.

A number of employers identified they had Holidays Act non-compliance prior to the Labour Inspectorate making contact. These employers signed an Enforceable Undertaking without an audit report being produced.

Payroll Audits commenced and completed

Graph of payroll audits commenced and completed

Holidays Act non-compliance remediation payments update as at June 2020

Jul 2012–Jun 2020
Number of employers who have paid arrears (average gross payment per affected employee) 112
  • $500 per employee or less
  • Between $501 and $1,000
  • $1,001 or more
Amount of arrears paid $237.7m
Number of employees paid arrears 227.3k
Range of average gross payment per affected employee per employer $29 - $16.2k

Figures reported above now include NZ Police data.

* Due to the nature of employment relationships some employees may have been counted multiple times.

Gross payout by number of affected employees

Graph of the gross payout by number of affected employees

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Page last revised: 09 October 2020

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