Author: David Jenkins, NZPPA CEO

Notional rosters are meant to make leave easier to administer where an employment agreement does not fully describe an employee’s standard hours. For payroll, they could create another difficult record to maintain, with consequences for leave, pay and employer liability.

The concern is the gap between the agreed reference pattern and the hours an employee actually works. Employers will have to keep that pattern current, explain it to employees and ensure payroll uses it at the right time. If they cannot, the reform risks moving uncertainty into payroll and creating fresh disputes and remediation costs.

In this article, I explore how notional rosters will affect payroll and why I question whether they will resolve the difficulties we already face with variable working hours. My aim is to highlight the practical problems employers and payroll practitioners will need to manage, and the questions that still need clear answers. Until MBIE provides practical guidance and worked examples at the level of detail payroll needs, I remain concerned that notional rosters could add work and compliance risk without delivering the certainty the reform promises.

What the Act requires

Section 6 provides for standard hours to be specified in the employment agreement, a work roster or a notional roster. Under section 10, the employer and employee must agree a written notional roster when entering into an agreement that provides for standard hours but leaves their number, days or daily distribution undetermined. They must keep it up to date. For days and daily hours, the roster can contain an agreed methodology.

The roster supports relevant leave accrual and determines when annual, sick, bereavement and family violence leave may be taken. Sections 32, 84, 95 and 113 contain the respective leave rules. Public holidays and alternative leave are expressly excluded from the notional roster’s purposes.

Sections 10 to 12 provide for Labour Inspector intervention where the parties cannot agree, cannot agree an amendment, or the Inspector considers the roster inappropriate. The Inspector considers the agreement and work patterns, with scope to give greater weight to the relevant recent 13 weeks. The determination is binding unless the Employment Relations Authority or a court makes its own determination.

Choosing the right roster can change the outcome

Payroll may have an employment agreement, a notional roster, a published work roster and actual time records for the same employee. Each can be accurate yet serve a different purpose. Choosing the wrong source can still produce an incorrect result.

The timing of a leave request matters. Where a work roster has already been set, it may take priority under the relevant leave provisions. Otherwise, the notional roster may apply. Payroll therefore needs to know what existed when the employee requested or notified leave.

For example, Joan has 24 standard hours a week. Her notional roster shows Monday to Wednesday at eight hours a day, but recently she has worked Tuesday to Friday in six-hour shifts. She asks for a Monday off before the work roster is issued. If the notional roster applies, eight annual-leave hours may be deducted even though she has not recently worked Mondays. A request after the work roster was set could have a different outcome.

That distinction is difficult to explain to employees doing similar work. An outdated pattern can also overstate or understate the hours needed to cover an absence, affecting balances and potentially leaving a pay shortfall. The employer must be able to explain the result and show the records behind it.

Keeping rosters current creates continuing work

A notional roster cannot be filed away after onboarding. Seasonal demand, flexible work, changes in hours or roles, and managers’ rostering decisions can all prompt a review. Someone must identify the change, consult the employee, secure the required agreement, record the effective date and update every connected system.

Consider a fruit-packing employee with 15 standard hours in the preparation season, 30 at peak and eight in the low season. Three agreed patterns may be needed. If peak season starts early, payroll cannot simply overwrite the current roster. It needs the correct effective dates and every earlier version to explain past leave calculations.

Disagreement can create further work. If an employee challenges a roster after four months of changed working patterns and an Inspector determines a different arrangement, the employer may need to review earlier leave, correct balances and payments, and check others with the same setup. A missed update can become a much larger problem.

A methodology still needs precise rules

Allowing a methodology gives employers flexibility, but phrases such as “normal hours” or “average recent shifts” are not enough to configure payroll. The method must explain the look-back period, treatment of leave and weeks without work, insufficient history, part-days, rounding and when to recalculate. Overrides need approval and supporting records.

Without detailed technical guidance, employers and providers may build different answers into their systems for employees in similar circumstances. Automation will then repeat the uncertainty every time leave is processed.

Public holidays require a separate assessment

Notional rosters cannot determine public-holiday or alternative-leave entitlement. Payroll must apply the otherwise-working-day rules in sections 13 and 14.

For example, if Paul is sick from Tuesday to Friday and Thursday is a public holiday, the notional roster may supply the hours for his sick-leave days. Thursday requires a separate assessment under the agreement-based or 13-week public-holiday test. One absence can therefore involve different rules and records, which payroll must reconcile and explain.

The burden extends beyond payroll

Employees need to understand what they are agreeing to, particularly how the pattern affects access to leave and the hours used. A signature on an unexplained schedule provides little reassurance. Each party may favour days or hours that improve their own position, creating scope for manipulation. Disputes may arise over high-hour days, seasonal changes and the timing of roster publication where those choices affect leave outcomes.

Large employers face the added task of maintaining arrangements across sites, roles, collective agreements and local management practices. A broad collective clause may not provide the individual detail payroll needs. Small employers may struggle to find the time and expertise for the same work.

Implementation will require a review of existing employees and source data before conversion. Filling missing fields with a standard Monday-to-Friday pattern could turn a migration shortcut into an incorrect statutory leave outcome. Multiple roles and changes between standard, additional and casual hours add further complexity.

Access controls also matter. Work-pattern histories must be available to those who need them, while sensitive information, particularly family violence leave information, remains protected through integrations and reports.

What employers and providers need to put in place

Employment New Zealand’s provider guidance already identifies the need for different notional rosters at different times, alongside hours-based accrual, multiple roles, leave compensation payments, rounding and clear calculation records. These requirements depend on each other. Correct calculation logic cannot make an unsuitable roster reliable.

Employers should start by identifying gaps in agreements and records, then work with providers on the controls needed:

• Identify who needs a notional roster. Where a genuine stable pattern exists, record it clearly in the employment agreement.
• Assign responsibility across managers, HR, rostering and payroll for agreement, review, effective dates and system updates. Train employees and managers as well as payroll staff.
• Keep written agreements and roster histories, including future seasonal versions. Link HR, timekeeping, leave requests and payroll so approved changes reach the calculation.
• Use reports to flag sustained differences between actual and notional patterns. Control manual overrides and retrospective changes.
• Require providers to demonstrate which record applies to each leave event. Test requests before and after roster publication, part-days, leave across pay periods, seasonal changes, public holidays and corrections.
• Retain employer-led acceptance testing and formal sign-off. Document assumptions, unanswered questions, exclusions and dependencies on MBIE guidance, and include material provider commitments in contracts and implementation plans.
• Give employees clear leave statements and retain enough evidence to reproduce a past result: the agreement, relevant rosters, request timing, methodology and approved overrides.
• Payroll should not be left to resolve missing employment decisions at pay-run cut-off. A provider release or default setting does not establish compliance, and the employer remains responsible for getting minimum entitlements right.

Stronger implementation safeguards are needed

MBIE needs to provide detailed, scenario-based guidance on which roster takes priority, acceptable methodologies, effective dates, review triggers, insufficient history, rounding, corrections and the evidence employers must retain. Providers should demonstrate how their software applies and preserves these records, disclose limitations and support remediation where system defects contribute to errors.

The work must be tested from the employment agreement through to the employee’s leave balance and payment. Testing a calculation in isolation will miss failures caused by incomplete agreements, late updates or the wrong roster being selected.

In conclusion, notional rosters should not be presented as a simple answer to variable work. They create an ongoing obligation to agree, maintain and apply a pattern that may struggle to reflect the employee’s working reality. Without clear guidance, capable software and disciplined employer processes, they risk inconsistent deductions, employee disputes and costly remediation.

The practical test is whether an employee can understand why particular leave hours were used and whether the employer can reproduce that answer years later. If either cannot be done, the notional roster has failed to deliver the certainty the reform promises.