Processing parental leave (New Zealand)
In this article we look at processing Parental Leave.
While an employee is on Parental Leave they continue to accrue holidays as normal. Their period of Parental Leave is not classified as Unpaid Leave but is dealt with as a continuation of employment. This means an employee will continue to become entitled to 4 weeks Annual Holidays as per usual, even though they are away on Parental Leave.
When an employee returns from Parental Leave, they are able to take holidays that they became entitled to while they were on Parental Leave. However, the Holiday Pay entitlement that the employee became entitled to during the period of Parental Leave and in the 12 month period after they return from Parental Leave are paid at the Last 12 Months (Average Weekly Earnings (AWE)) rate only. The value of any Holidays taken directly after returning from Parental Leave is likely to be very low, depending on how long the employee was away on Parental Leave, but will build back up over the following months.
Click here to view an article on NZ at Work's website regarding Parental Leave.
The MYOB Exo Payroll software has no specific settings for Parental Leave. We recommend the following procedure:
Paying holiday days
If the employee takes any holidays that they became entitled to during the Parental Leave period or in the 12 months after returning from Parental Leave, this leave should be paid at the Last 12 Months (Average Weekly Earnings (AWE)) rate only.
Due to this, the system will always value Holiday Pay at the higher of AWE vs OWP - you will need to manually adjust the value of any Holiday Pay days that were earned on Parental Leave or in the 12 months afterwards to pay them at AWE only.
The Holiday Pay report will reflect normal rate calculations and will be incorrect for any employee on Parental Leave or within the 12 Month period after returning from Parental Leave.
The Last 12 Months (AWE) rate for Holiday Pay can be found from the 12 Month Average rate shown on the 'Pop-Out' screen to the right of the Current or One Off Pay screens (shown above) or calculated as follows:
Need more help? You can open the online help by pressing F1 on your keyboard while in your software.
You can also find more help resources on the MYOB Exo Employer Services Education Centre for Australia or New Zealand.