When asking Kiwis what their entitlements are when it comes to annual leave, holidays and resignation, the responses are generally vague. Government statistics show that over 50% of working Kiwis have held their current employment position for less than 18 months, therefore, it is imperative for them to be familiar with employment law and employee rights.
An Employment Agreement (“Agreement”) generally allows for employees to resign at any point in employment given they provide notice of resignation (“Notice”). Notice can be given in the manner specified in the Agreement or in writing at a minimum.
When resigning there are various options available; however, for the purposes of this article, two options are discussed in detail: Gardening leave, or an Agreement.
Firstly, employees may take what is often known as Garden Leave. Garden Leave allows for employees to be bound by their employment obligations and be paid as normal, whilst not undertaking work for the remainder of their Notice.
Granting Garden Leave requires mutual agreement by the employee and employer, although this agreement may be given under the Agreement. Gardening Leave is often used where employers wish to restrict the departing employee’s access to clients or confidential information.
Secondly, an Agreement can be reached between the employee and employer to terminate employment immediately rather than at the expiry of the Notice. If an employee does leave prior to the Notice period finishing, without the consent of the employer, the employer is entitled to seek damages or losses in the Employment Relations Authority or Employment Court. These damages may include the costs of hiring additional staff for the period of the Notice or the loss of work opportunities due to the lack of staff available.
In light of the potential repercussions outlined above, it is imperative that any agreement of this nature is documented in writing.
An employee is entitled to request their final pay on the last day of work rather than the following payday.
The final pay must include:
- All hours worked since the last payday until the end of employment;
- Any annual holidays, public and alternative holidays accrued; and
- Any additional lump sum or other payments owing which may be included in the Agreement or negotiated as part of leaving.
If the final pay does not include the bulleted points above, employees are encouraged to, in the first instance, seek any entitlements in arrears from their employer. If a dispute arises, other options available include making a claim for a breach under the Agreement or the Employment Relations Act 2000. In the event of such a dispute, it is recommended to seek legal advice.
Under the Holidays Act 2003, employees in New Zealand are entitled to a minimum of 4 weeks paid annual leave (“Leave”) per year with the opportunity to take at least 2 of the 4 weeks Leave continuously. Unless otherwise agreed, leave entitlements are subject to the employee working 12 months for the same employer.
Leave pay must be the greater of the ordinary weekly pay or the average weekly earnings over a 12-month period, prior to the Leave. The latter may be more relevant for employees who work on a commission basis or non-periodic schedules.
If an employee has worked for a 12-month period for the same employer, the employee may agree with their employer to either:
- Take all Leave accrued that year; or
- Take a portion of Leave accrued as soon as possible and carry over the remaining Leave into the next year; or
- Be compensated financially for up to one week of Leave.
On resignation, if an employee has not reached 12 months of employment; they are still entitled to payment for annual holidays being calculated at 8% of their gross earnings during employment.
Employees are entitled to request unpaid leave in addition to their leave entitlements.
It is recommended that before resigning from a position, the Agreement’s terms and conditions are read and understood. Understanding your entitlements and the right to request or demand an act or information as an employee is tremendously beneficial. This knowledge provides protection and ensures employees are informed, and treated fairly by their employer.
If you have any questions or if you have any employment issues you would like to discuss with a Solicitor, contact us.