Q: I’m just trying to calculate someone’s annual leave. They went on parental leave last year between May and October and their Annual Leave anniversary date is the 25th of February. I thought that any annual leave they would’ve taken between October and the 25th of February would be affected by their Parental leave and calculated by working out the rate of the employee’s average weekly earnings over the 12 months just before the end of the last pay period before they go on annual leave (with no comparison to ordinary weekly pay). However, my payroll provider is saying that their Ordinary Weekly pay should be used as it’s accrued leave they are taking and not entitled leave. They are saying that the employee’s average weekly earnings over 12 months is only used when the employee becomes entitled to the leave (ie. after the 25th of February). It seems like a bit of a grey area. Please advise what you believe is correct.

A: If an employee takes annual holidays in advance (no entitlement that was earned after 12 months of continuous employment) it is the greater of AWE and OWP. The period of AWE would be lower because of the unpaid parental leave but OWP (would be what the week is).  This is because it uses section 22 of the Holidays Act.

Q: I just wanted to clarify that I’ve got this correct. If the employee has no Entitled Annual Leave, are you saying that if that if they use “accrued annual leave” between the date they return from parental leave and their anniversary date, then it’s the greater of AWE and OWP? And then when this leave changes into Entitled Leave on their anniversary date then we use their AWE?

A: Yes as Section 22 of the Holidays Act must be used for annual holidays in advance (greater of AWE and OWP, with the reduce divisor for AWE), but when any annual holiday entitlement is earned while on parental or in the 12 months of return from parental that can only use AWE (Section 42 of the Parental Leave Act)