The strict circumstances in which 8% pay-as-you-go holiday pay can lawfully be used for genuinely intermittent or irregular work and qualifying fixed-term employment.
The purpose of the Holidays Act 2003 is to promote balance between work and other aspects of employees lives and to provide employees with minimum entitlements to annual holidays that provide the opportunity for rest and recreation.
The Holidays Act 2003 sets minimum leave and holiday entitlements in New Zealand. The purpose is to promote balance between work and other parts of employees' lives, and to provide minimum entitlements for rest and recreation.
Most Holidays Act disputes are not about whether leave exists. They are about payroll setup, record keeping, and calculations. Problems commonly show up when employment ends, when an employee asks to take leave, or when a business is audited and discovers a historical underpayment (or a large liability sitting in the background).
The Holidays Act sets minimum rules for:
The Holidays Act uses different concepts depending on the entitlement. The key ones are:
If your payroll system is set up incorrectly, it can create a rolling liability and a large dispute later. It is usually cheaper to fix it early than to argue about it later.
Paying annual holiday pay "as you go" (often called 8 percent holiday pay) can look simple, but it is one of the most common employer mistakes. It is only lawful in limited situations and only if all conditions are met.
In general terms, annual holiday pay may be paid with an employee's pay only where the employment is genuinely:
Even if one of the scenarios above applies, pay-as-you-go still must be:
Usually no. This is a major reason employers should take pay-as-you-go seriously. If the employment has become regular and ongoing, the better approach is normally to identify the liability and fix the payroll setup rather than hoping the problem goes away.
A frequent error is paying the wrong daily rate, especially where employees have variable hours, allowances, or different rates. Even when the entitlement is clear, the pay calculation can be wrong.
The strict circumstances in which 8% pay-as-you-go holiday pay can lawfully be used for genuinely intermittent or irregular work and qualifying fixed-term employment.
![Sophie Kennett v Polygon GY Developments Limited [2026] NZERA 405 - engineered resignation, redundancy and Holidays Act entitlements](/Images/site/EmploymentAdvocatesAucklandCard.jpg)
Sophie Kennett resigned from Polygon GY Developments after a course of conduct she said was designed to force her out, in a context also involving a claimed redundancy and unpaid Holidays Act entitlements. The ERA examined the reality of the resignation rather than only its formal label.
Aurora Developments disputed when quantity surveyor Junchen Xu became an employee, saying his first month was only unpaid learning and observation, and later made him redundant without a proposal or consultation. He also claimed wages, incentives and holiday entitlements.
Sasha Lee performed management, HR and operational work across JNJ group businesses before duties were removed and her position was later declared redundant. She challenged both the unilateral reduction of responsibilities and the redundancy process, together with wage and holiday-pay issues.
ZiGen Wong worked for NZAT Construction without a valid work visa and was later denied wages and employment protections on the basis that the arrangement was not lawful employment. He claimed employee status, arrears and constructive dismissal.
Sirikanya Pankhum was working under a six-month probation clause when Super Vape Store ended her employment by WhatsApp. A probationary arrangement did not remove the requirement for the employer to identify concerns, hear her response and use a fair dismissal process.
Construction workers Nan Jia and Huachao Hou alleged FX NZ made unlawful rent deductions from wages and failed to pay public-holiday, annual-leave and other minimum entitlements. Their case combined employment-standard claims with personal-grievance issues about the employer's treatment of them.
Lautusi Isaako worked full-time for ABS Builders under day-to-day direction but the respondents disputed aspects of the employment relationship and later ended his work by text after raising performance concerns for the first time. The case also involved public-holiday, annual-leave and record-keeping failures.