This help guide will detail the underlying logic used to determine leave balance calculations in Tanda Payroll NZ.
In New Zealand, annual leave is paid at the employee's "weekly rate", which is the highest value out of their:
Ordinary Weekly Pay (OWP): Calculated by taking the employee’s average weekly rate over the last four weeks, divided by the number of days normally worked per week. This rate will usually be the highest.
Average Weekly Earnings (AWE): Calculated by taking the employee’s total gross earnings over the past 12 months, divided by the number of weeks worked and, then divided by the number of days normally worked per week.
To learn more about the difference between OWP and AWE, see this resource from Employment New Zealand.
Previously, our calculations required employees to have completed four-week and/or 52-week periods before producing accurate results. This limitation meant that new employees had to wait at least four weeks before Tanda Payroll NZ could calculate an accurate Ordinary Weekly Pay average for them, thereby creating delays in leave calculations and leading to confusion.
To correct this, we now calculate these OWP and AWE averages using all available pay periods within the relevant timeframes, rather than waiting for complete periods or using incomplete data.
For example:
The Ordinary Weekly Pay average for an employee with two payslips would be calculated by taking the employee’s sum earnings ÷ two weeks (previously, we would have divided by four, diluting the average).
The Average Weekly Earnings for an employee with 24 payslips would be calculated by taking the employee’s sum earnings ÷ 24 weeks (previously, we would divide by 52, including zero-value periods).
The Ordinary Weekly Pay average for an employee with 4+ weeks would be calculated using the actual weekly count up to the four-week limit.
The Average Weekly Earnings for an employee with 52+ payslips would be calculated using the actual weekly count up to the 52-week limit.
To learn more, see our help guide: Tanda Payroll NZ Leave Settings Explained.