Q: I have one employee on the following package:

Normal pay: $15,000.00 fixed per month
Car allowance: $1,500.00 fixed per month
Kiwisaver allowance: $500.00 fixed per month

Car allowance and Kiwisaver allowance were recurring monthly regardless if the employee was working or on AL/SL. If the employee is on full month AL, the pay is as follows

AL 173.33 hours
Car Allowance $1,500.00
Kiwisaver Allowance $500

The question is for AL 173.33 hours, should we pay $15,000.00 (as Car allowance and kiwisaver allowance are paid via separate pay codes)? Or should we add car allowance and kiwisaver allowance to calculate inflated average weekly income for AL payments? The employee does not lose any allowance entitlement while on leave

A: both the car and KS allowance is part of gross earnings that leave and the KS employer contribution is based on.  So Yes it will inflate the leave rate.

For the car allowance it should be written into the employment agreement that the car allowances is  not paid on any period of leave taken or it create double dipping.