What’s missing? The myth of “accrued leave”

Let’s start with what isn’t in Section 16: accrued leave.

If you searched the Holidays Act 2003 for the terms “accrued leave” or “leave accrual”, you’d come up empty. Neither term appears in the legislation.

Yet most payroll systems use these terms to describe leave earned during the first 12 months of employment – and in every 12-month period after that. Some systems even show two leave balances:

• Leave accrued
• Leave entitled

But here’s the thing: only “leave entitled” is legally recognised. “Leave accrued” is a system construct – not a legislative one.

So what’s the problem?

If there’s no mention of leave accrual in legislation, but your system displays leave accrued, how do you know it’s correct?

And if leave is accruing – how is it accruing? In weeks? In most systems, leave accrual is in hours, sometimes in days, and possibly in weeks if you’re lucky.

How does this accrual work for employees with varied hours? Is it based on hours worked – also known as proportional accrual?

And how does that get translated into a 4-week entitlement once the 12-month mark is reached?

Understanding “continuous employment”

Let’s go back to Section 16 – “each completed 12 months of continuous employment.”

Let’s review what continuous employment means.

At first glance, it seems simple: work 12 months, get 4 weeks of leave. Easy, eh? Yeah, nah.

What happens if an employee takes time off during those 12 months? Is employment still considered continuous? In most cases, yes.

Even some types of unpaid leave are considered continuous employment – think unpaid sick leave, unpaid bereavement leave, unpaid jury duty, etc.

Only unpaid leave not related to these categories, and greater than one week, is excluded from the definition of continuous employment.

So what does your system do in those cases?

• Does it push out the leave entitlement date (anniversary date)?
• Reduce the divisor?
• Or… does it do nothing at all?

The ACC scenario: an easy one to miss

Here’s one to look out for: unpaid injury leave while an employee is receiving weekly compensation from ACC.

If an employee returns after a period of injury leave, however long, the time away is still considered continuous employment.

That means the employee may be entitled to 4 weeks of annual leave, even if they haven’t worked at all during the past 12 months.

As the company isn’t paying the employee, and the role may have been filled by someone else, this often drops off the radar. Confusion and frustration follow when the employee returns and claims their 4 weeks of leave.

Surely they’re not entitled? Oh yes, they are.

But what is “4 weeks of leave” really?

Here’s the big question – what exactly does 4 weeks of leave mean in your system?

Is the balance stored in hours or in weeks?

If it’s in hours, how do you know the correct number of hours have been converted into the equivalent of 4 weeks?

Have the employee’s regular hours changed in those 12 months?

• Has a full-time employee gone part-time?
• Has a part-time employee gone full-time?

Are the hours now more or less than the equivalent of 4 weeks?

So what’s the problem?

If there’s no mention of leave accrual in legislation, but your system displays leave accrued, how do you know it’s correct?

And if leave is accruing – how is it accruing? In weeks? In most systems, leave accrual is in hours, sometimes in days, and possibly in weeks if you’re lucky.

How does this accrual work for employees with varied hours? Is it based on hours worked – also known as proportional accrual?

And how does that get translated into a 4-week entitlement once the 12-month mark is reached?

Section 17: Agreement (or disagreement)

Section 17 of the Holidays Act explains how the entitlement to 4 weeks’ annual holidays can be met. The recommended approach? Employer and employee should agree on how the 4-week entitlement is fulfilled.

But who actually has those conversations?

In most cases, it’s left up to the payroll system to define the 4 weeks of annual holidays. But is that definition correct? Are you relying on a flawed system?

What happens when there’s no agreement?

Even worse, under Section 17(2), if the employer and employee can’t agree, then a Labour Inspector can make the determination.

Yikes.

The Labour Inspector may also refer to Section 12 of the Act, which defines an otherwise working day. Are these otherwise working days accurately recorded in your time and attendance system? If not, then the door is open for the Labour Inspector to dig even deeper – something you want to avoid.

Final note: payment is a separate issue

And don’t get me started on payment for those 4 week, that’s a subject for another article.

So…eight simple words that cause so much consternation and angst – not less than 4 weeks paid annual holidays.

So… is your system compliant?

Is your system compliant? The question isn’t whether you trust your system –  it’s whether your system actually aligns with the Holidays Act.

A quick compliance audit can:

• Review your accrual settings
  
• Check anniversary date handling
  
• Confirm how “4 weeks” is calculated in real-world terms

→ Ask us about a Holidays Act audit today.

Written By: Dawn Grant

Payroll Is Business-Critical. So Why Isn’t It Treated That Way?

Payroll isn’t just a routine back-office task. It’s the process that keeps your people paid, your business compliant, and your reputation intact.

Yet in many organisations, payroll sits precariously on the shoulders of one person. If they’re sick, on holiday, or suddenly unavailable – there’s no safety net.

Even worse, the payroll process itself is rarely documented. That means there’s no guide, checklist, or fallback plan. Just one person’s working memory. And when they’re gone, so is all that operational knowledge.

We’ve seen it first-hand. We’ve supported organisations where multiple payroll staff left at the same time, leaving no documentation behind. With no clear process and no one trained to step in, payroll ground to a halt. We were brought in to help map out the workflow, restore continuity, and get things back on track. It was a stressful moment that could have been avoided with a simple backup plan.

The Hidden Complexity of Payroll

On the surface, payroll might seem like a predictable task. But dig deeper and you’ll find:

• Complex legislative requirements like the Holidays Act and PAYE calculations.
• Confidential employee data that demands strict privacy controls.
• System quirks and workarounds that only your payroll person understands.
• High-volume periods such as EOFY or new system rollouts that stretch even seasoned teams.

It’s not something you can hand off to ‘whoever’s free.’ And it’s certainly not something you want to get wrong.

When payroll fails, the consequences are immediate:

• Staff aren’t paid correctly – or at all.
• Compliance risks snowballing.
• Trust is eroded.
• And if a worst-case scenario unfolds, you could be looking at media scrutiny, legal issues, and reputational damage.

Payroll Support Services: The Third Option (and the Smart One)

This is where payroll support services come in.

Whether you’re facing a short-term absence or need long-term assistance, a payroll support partner like Alxemy offers:

• Continuity – ensuring payroll is processed accurately and on time, no matter the disruption.
• System familiarity – working within your current systems and processes, not overhauling them.
• Compliance confidence – meeting legislative requirements without putting internal teams at risk.
• Scalable capacity – providing extra hands during high-volume or high-pressure periods.

Think of it like business continuity insurance – except it’s proactive, cost-effective, and people-focused.

Why Documentation Matters (And Why So Few Have It)

Another overlooked risk? Lack of documentation.

Most businesses don’t formally document their payroll processes. Not because they’re careless, but because no one thinks to – until disaster hits. It’s an invisible liability hiding in plain sight.

A good payroll support service can help here too. At Alxemy, we’ve worked with clients to:

• Map out payroll processes step-by-step.
• Identify single points of failure.
• Build out backup plans.
• Train secondary resources.

That way, even if someone is unavailable, the show can go on – and staff get paid without panic.

 Be Ready Before You Have to Be

We’re not saying your payroll person is going to disappear tomorrow. But wouldn’t you rather be prepared?

Payroll support isn’t just for emergencies. It’s about resilience, trust, and peace of mind – for your business and your people.

So next time you ask: “What would we do if our payroll person wasn’t here?”  –  don’t default to unrealistic options.

Avoid option 1: (hospital-bound payroll).
Avoid option 2: (winging it solo).
Choose option 3: a trusted payroll support partner who’s ready when you need them most.

Need Help With Payroll Contingency or Coverage?

Whether you’re preparing for leave cover, navigating a high-volume period, or simply want to reduce your payroll risk – Alxemy can help.

Talk to us today about building a resilient, documented payroll function – so you’re never caught off guard.

Visit www.alxemy.co.nz/payroll-processing
Or Contact Us for a confidential chat.

 What Is the PMI Global Awards?

The Project Management Institute (PMI) is the world’s leading authority on project management. Since 1969, it has helped organisations and individuals deliver more effectively through professional certifications (like PMP and PMI-ACP), global frameworks (including the PMBOK Guide), and community networks such as PMINZ here in Aotearoa.

Its Global Awards recognise PMOs that drive significant business value, strategic alignment, innovation, and community impact.

Cel’s judging role involves rigorous assessment of entries from organisations across the globe. Each PMO is evaluated on a wide range of criteria: its establishment and evolution, the value it delivers internally, its contribution to external communities, and its capacity to innovate and adapt.

The Power of a Great PMO

Over the course of her judging, Cel has reviewed dozens of submissions – each one offering a unique perspective on how project offices operate across different industries and cultural contexts. But the most successful ones all share a common thread: they are change enablers.

“Strong PMOs are game changers,” Cel explains. “They drive efficiency, strategic focus, and smarter decisions across all levels of an organisation.”

Her experience highlights that the impact of a PMO often goes beyond just operational performance. The best PMOs become a driving force for social and environmental responsibility, delivering value that benefits not just the organisation, but communities and the planet as well.

Elevating Project Delivery Worldwide

Cel has personally led teams of over 100 people, delivered 7,000+ projects, and embedded best-practice frameworks into large-scale consulting environments. Under her leadership, those projects were completed 100% within budget – a rare feat in the project world.

These accomplishments aren’t just numbers; they reflect a consistent commitment to strong governance, people leadership, and continuous improvement. As a PMI Judge, she brings this lens to the judging process – valuing not just flashy metrics, but long-term impact, adaptability, and cultural alignment.

Sustainability and Community Impact

One of the most meaningful aspects of the Global Awards for Cel is the emphasis on community impact and environmental sustainability. These are not just ‘nice to have’- they’re part of the core criteria for winning.

Cel has reviewed submissions from PMOs that have contributed to reducing pollution, lowering carbon footprints, and investing in local community wellbeing. In her eyes, this demonstrates the growing role PMOs play in creating a better world – not just a better business.

Looking Ahead: A Bigger Platform for Change

As Cel looks to the future, her focus is on growing awareness of the PMI Global Awards – both internationally and within New Zealand. She’s passionate about helping businesses and industries understand just how transformative good project management can be.

Cel remains committed to promoting the value of PMOs as enablers of lasting progress. Whether it’s through governance, community initiatives, or sustainable delivery models, she believes PMOs have a vital role to play in shaping a better tomorrow.

The Real Cost of Getting It Wrong 

When system implementations go wrong, the impact is never limited to IT. It spreads across departments, processes, and people:

• Lost time spent evaluating, implementing, and ultimately reworking the solution
• Budget blowouts from change requests, additional staffing, and delays
• Internal disruption, with teams stuck using systems that don’t suit their needs
• Strategic setbacks , as business transformation goals fall flat

Worse still, some organisations go live with systems they know aren’t working – because it’s too late to turn back.

But here’s the thing: many of these costly outcomes are entirely preventable with the right support – before you go to market.

Why Executives Need Strategic System Advice – Before They Go to Market

When system implementations go wrong, the impact is never limited to IT. It spreads across departments, processes, and people:

Choosing a new payroll, HCM, or workforce management system is a high-stakes decision. These platforms underpin your compliance, employee experience, reporting, and operational efficiency.

Executive teams often underestimate just how complex these decisions can be. Without clear visibility into system limitations, market options, or how different platforms align with their business strategy, it’s easy to head down the wrong path. That’s where strategic system advice comes in.

Independent, vendor-agnostic guidance at the outset helps you:

• Clarify your real requirements and success criteria
• Understand your existing system landscape and technical debt
• Align internal stakeholders before engaging vendors
• Avoid getting swept up in the sales pitch for a system that won’t deliver long-term value

Common Mistakes That Derail System Projects

Without strategic planning upfront, businesses often fall into the same traps:

1. Rushing into an RFP process

Teams are under pressure to move fast – but launching an RFP without defined requirements or a robust business case is a recipe for misalignment.

2. Prioritising the shiny over the strategic

It’s easy to be sold on a sleek interface or a long feature list. But good design means nothing if the system doesn’t handle local compliance requirements or complex leave calculations.

3. Chasing the “all-in-one” dream

There’s a common assumption that one platform can do everything better. In reality, “all-in-one” often means trade-offs across critical areas. For some organisations, a best-of-breed approach may be a better fit – if it’s mapped correctly.

4. Forgetting the bigger picture

HCM systems never operate in isolation. They must integrate with rostering, finance, reporting, recruitment, learning management, and more. Without ecosystem thinking, organisations find themselves trapped in silos or reliant on fragile manual workarounds.

What Strategic Advice from Alxemy Covers

Strategic system advice isn’t about picking a product – it’s about designing a smarter path forward.

• System Landscape Reviews
  We help you understand your current systems, what’s working, what’s not, and where technical debt may be creating risk.
• Fit-for-Purpose Assessments
  We go beyond feature lists to evaluate whether a system will actually solve your organisation’s pain points.
• Ecosystem Thinking
  We look at the whole picture: how any new system will interact with your other tools, departments, and workflows.
• Strategic Roadmapping
  We help you define what needs to be done now, what can wait, and what to avoid – saving you time, budget, and headaches down the line.

–The Value of Vendor-Agnostic Advice

When it comes to system selection, neutrality matters. At Alxemy, we don’t sell on commission or push a preferred platform. Our role is to help you make the best decision for your organisation – based purely on your needs, not someone else’s sales target.

We bring independent, strategic thinking to the table. That means:

• Clear guidance based on your goals and system landscape
• Honest assessments of vendor claims and limitations
• Confidence to walk away from poor-fit options – even the shiny ones

In a space crowded with noise and pressure, neutral advice cuts through. It helps you see past the marketing, weigh up the trade-offs, and choose a solution that genuinely works for your people, processes, and future plans.

Because choosing the right system isn’t about brand names – it’s about business fit.

How This Advice Changes the Game

When it comes to system selection, neutrality matters. At Alxemy, we don’t sell on commission or push a preferred platform. Our role is to help you make the best decision for your organisation, based purely on your needs, not someone else’s sales target.

Engaging strategic advice before you go to market shifts the entire trajectory of your system implementation.

Rather than reacting to vendor proposals or forcing your business to fit a product, you lead with clarity: knowing exactly what you need, where you’re heading, and what success looks like long term. That alignment creates ripple effects:

• Faster decisions, with everyone on the same page from day one
• Less friction across teams, with HR, finance, IT, and operations aligned
• Stronger vendor management, driven by a clear brief and firm priorities
• Smoother implementation, with realistic expectations and fewer surprises
• Minimal rework, because your system is designed for you; not someone else

When the groundwork is solid, implementation stops being firefighting, and starts being transformation.

That’s the power of getting it right early.

Thinking about a new system? Already planning an RFP?

Wherever you are in the process, Alxemy’s Strategic System Advice gives you the clarity, confidence, and structure to get it right from the start.

What you get:

✔️ Fixed pricing – no surprises
✔️ Independent advice – based on your needs, not sales targets
✔️ Real-world experience – across leading payroll, HCM, and workforce systems

Visit the Strategic System Advice page or get in touch for a no-pressure chat about your plans.

Is your system compliant with the latest changes effective 1st April?

Update on ESCT rates – new thresholds

Following on from the change in tax thresholds that came into effect on 31 July 2024, there is a further change to the tax thresholds for ESCT rates for employers’ Kiwisaver contributions as at 1st April. It is always recommended to review ESCT rates once a year after 1 April, but this is more important this year due to the tax threshold changes.

Action: Does your payroll system have a method for determining the ESCT rate for employees and what is the process?

Taxation of extra pay when employment ends

From 1 April new rules will be in place for extra pay on termination. The annualised amount will now be based on the PAYE income for the last two paid pay periods prior to the termination pay. If an employee is weekly paid, then the annualised amount will be calculated on the last two paid weeks times by 26 to get the annual income. Fortnightly paid will be based on the last two fortnights pay periods times by 13 and monthly paid will be based on the last two monthly pays times by 6 to get the annual income. The last two pay periods are the periods on which the employee received regular payments and excludes out of cycle payments made in between. The calculation also excludes any extra pay made in the regular pay period.

Action: Has the software provider updated the system to accommodate this new taxation rule?

1 April Min wage change

On 1 April 2025, the minimum wage will increase from $23.15 to $23.50, an increase of 35c. While this year’s increase is less than in previous years, it’s important to check employees’ rates and increase where the minimum wage is applicable. Be careful of the calculation of piece work where the average rate may fall below $23.50.

Action: Review and update any pay rates for employees on minimum wage. As this is legislated, there is no requirement to notify the employee although it is best practice.

ACC earner levy

Apart from a period from 1 April 2020 to 31 March 2022, ACC levies increase each year. ACC levies are included in the employees’ tax take each pay run and is not easily identified as the tax take is one amount encompassing both the PAYE and Earner’s Levy. This year the ACC levy is increasing from $1.60 per $100to $1.67 per $100. While the increase is small, there are some employees who notice the increase in tax and thus the reduction in net pay and may query it so it pays to have this in mind when processing the first pay run paid after 1 April.

Action: Review any release notes from software provider and spot check a few employees in the first pay run paid in April to ensure this has been updated.

Is your system compliant with the latest changes effective 1st April?

Update on ESCT rates – new thresholds

Following on from the change in tax thresholds that came into effect on 31 July 2024, there is a further change to the tax thresholds for ESCT rates for employers’ Kiwisaver contributions as at 1st April. It is always recommended to review ESCT rates once a year after 1 April, but this is more important this year due to the tax threshold changes.

Action: Does your payroll system have a method for determining the ESCT rate for employees and what is the process?

Taxation of extra pay when employment ends

From 1 April new rules will be in place for extra pay on termination. The annualised amount will now be based on the PAYE income for the last two paid pay periods prior to the termination pay. If an employee is weekly paid, then the annualised amount will be calculated on the last two paid weeks times by 26 to get the annual income. Fortnightly paid will be based on the last two fortnights pay periods times by 13 and monthly paid will be based on the last two monthly pays times by 6 to get the annual income. The last two pay periods are the periods on which the employee received regular payments and excludes out of cycle payments made in between. The calculation also excludes any extra pay made in the regular pay period.

Action: Has the software provider updated the system to accommodate this new taxation rule?

1 April Min wage change

On 1 April 2025, the minimum wage will increase from $23.15 to $23.50, an increase of 35c. While this year’s increase is less than in previous years, it’s important to check employees’ rates and increase where the minimum wage is applicable. Be careful of the calculation of piece work where the average rate may fall below $23.50.

Action: Review and update any pay rates for employees on minimum wage. As this is legislated, there is no requirement to notify the employee although it is best practice.

ACC earner levy

Apart from a period from 1 April 2020 to 31 March 2022, ACC levies increase each year. ACC levies are included in the employees’ tax take each pay run and is not easily identified as the tax take is one amount encompassing both the PAYE and Earner’s Levy. This year the ACC levy is increasing from $1.60 per $100to $1.67 per $100. While the increase is small, there are some employees who notice the increase in tax and thus the reduction in net pay and may query it so it pays to have this in mind when processing the first pay run paid after 1 April.

Action: Review any release notes from software provider and spot check a few employees in the first pay run paid in April to ensure this has been updated.

1. Payroll is always the last to know

When recruitment, HR and payroll sit in different departments, or the locations are remote and in a different office, lines of communication can be fractured, and payroll is not aware of the new hire until the employee asks why they haven’t been paid.

With recruitment, HR records, and payroll in one system, when the recruitment manager hits the HIRE button in the recruitment module, the new employees’ details are added to the HR record in Dayforce and a notification of the new hire is sent to all departments that need to know, such as payroll, IT and the employee’s manager.

2. Global Locations

As is often the case with New Zealand companies, especially multinationals, the head office is in another country, and in some cases, the employees’ reporting manager is also in another region. 

Dayforce is a truly global system meaning that an employee in New Zealand can be managed by a manager in another country. An employee can even have more than one manager, perhaps one based in the location in which they work and one based offshore. These management assignments can also be swapped out if reporting lines change.

3. Smart Onboarding

Nothing is more welcoming to a new employee than a robust onboarding experience but this is an area that often gets neglected and a new employee arrives when no one is expecting them, there is no place for them to work, and no buddy to tell them where things are and what they will be doing.

Dayforce has an onboarding module that can be configured to suit the role as well as the location.  And it introduces a new employee to their buddy who will be their go-to in the first few days of employment.  Onboarding can also provide a guided introduction to the company including employment forms and policy documents all in one place.

4. Multiple Roles

Some HR and payroll systems can’t handle employees who work in more than one role in more than one department/location. Dayforce has the ability to assign employees to multiple roles in multiple locations at different pay rates.

5. Continuous Payroll

Most payroll cycles have a definitive start period, usually after the pay period has ended. For example, the pay period ends on Sunday and the pay is due on Tuesday.  Payroll can’t start processing payroll until Monday which results in a large volume of work in a short space of time.

Dayforce payroll can be initiated at any time in the pay cycle and can even be initiated in advance. Continuous payroll means that payroll personnel have the time to amend pay calculations and check the result in real time well ahead of the pay run deadline. This creates efficiency and accuracy in the scheduled pay run resulting in fewer out of cycle pay runs.

6. Messaging

Communications with employees can be a hit or miss affair with conventional methods such as a companywide email to a wide audience that could end up in junk/spam inboxes and not be read or is irrelevant to a certain group of employees. Dayforce includes an integrated messaging system that functions like an email inbox, allowing messages to be customized for specific groups of recipients – such as employees in a particular location, department, pay group, or role.

Employees can also use the Message Centre to communicate with one another, providing a messaging option for those without a dedicated inbox. This is especially useful for casual or fixed-term employees, as it allows them to send and receive messages without the need for a company email account.

7. Hard coded platform that doesn’t allow for customisable features

It is quite common for an HR/payroll system to be inflexible to the company’s requirements and only large-scale corporations can invest in requiring the vendor to create a system that meets their needs.  Smaller companies must deal with the system provided and initiate workarounds. 

The Dayforce system is configurable to the company’s individual requirements as part of the implementation process ensuring that the system meets the specific needs of that company.

8. Multiple systems across mulitple platforms that creates errors and inefficiencies

With recruitment in one system, HR in another, time and attendance in another, payroll in another and performance in yet another, it is no wonder data goes missing, is misinterpreted and fails to align. Susan can be Sue on one system and Susie in another.

Dayforce is a fully integrated system for the whole of the life cycle of an employee from recruitment to termination and everything in between. No need to integrate data from one system to the next and losing information along the way.  And goodbye to receiving the dreaded ‘import failed’ message when data doesn’t align.

9. Mobile App

How often have you heard from an employee; I can’t complete my leave request because I don’t have access to my computer? Or I didn’t know I was working that shift?

This is where the Dayforce mobile app comes in. Available in iOS and Android, the app can be used for anything that an employee can do in the browser – apply for leave, check their shifts, message colleagues and even view their payslip. For the Manager, they can approve leave, send notifications and announce available shifts to their team.

10. And last but not least – complaint with New Zealand Holidays Act

Many payroll/time and attendance systems are not compliant with the New Zealand Holidays Act, even systems that are New Zealand based.

Dayforce comes with an out of the box New Zealand Holidays Act configuration that has annual leave in weeks and circumstantial leave, commonly known as FBAPS leave, in days. Dayforce also calculates the OWP/AWE rates for annual leave as well as RDP/ADP rates for circumstantial leave making it compliant with New Zealand legislation.