Leave Types and Corresponding Calculations

Outline

• Quick Reference for Leave Calculations & Tax: This article is a quick reference guide that links each type of leave under the Holidays Act 2003 to its correct calculation method (e.g., AWE, OWP, RDP) and tax treatment.
• Which Calculation Method Should You Use?: This section features a detailed table showing which calculation formula to use for every paid leave scenario, from taking a standard annual holiday to complex termination payments.
• How Is Each Leave Type Taxed?: Use this second table to quickly determine how each leave payment should be taxed. It clearly indicates whether a payment is taxed as part of the employee's normal pay or as a lump sum "Extra Pay".

Annual Holiday Calculations

• AWE - Average Weekly Earnings
• OWP - Ordinary Weekly Pay
• 8% - Pay as you go

Other Leave Calculations

• RDP - Relevant Daily Pay
• ADP - Average Daily Pay

Holdays Act 2003 types of leave and calculations to use.

PAID LEAVE TYPES

Leave name/Type of leave	Calculation used
Annual holiday taken	Greater AWE and OWP
Annual holiday cash up (up to 1 week)	Greater AWE and OWP
Annual holiday paid in advance	Greater AWE and OWP (note, divisor for AWE reduced to reflect time worked)
Annual holiday paid on termination	Greater AWE and OWP
Pay as you go	8%
Terminates before 12 months	8% less any annual holiday paid in advance
Terminates after 12 months	(Entitled leave at greater of AWE and OWP)+8% of Entitled leave value + 8% of Gross Earnings since anniversary less any annual holiday paid in advance
Sick leave	RDP or if that cannot be used ADP
Bereavement leave	RDP or if that cannot be used ADP
Public holiday worked	1.5 of RDP or if that cannot be used 1.5 ADP
Public holiday taken	RDP or if that cannot be used ADP
Alternative holiday paid out on termination	RDP or if that cannot be used ADP
Family violence leave	RDP or if that cannot be used ADP

UNPAID LEAVE TYPES

Leave name/Type of leave	Calculation used/ How taxed
Unpaid sick, bereavement, or family violence leave	Not paid / NA
Unpaid Leave	Not paid / NA

Holdays Act 2003 types of leave and how they are taxed.

PAID LEAVE TYPES

Leave name/Type of leave	How taxed
Annual holiday taken	Taxed normally
Annual holiday cash up (up to 1 week)	Extra Pay
Annual holiday paid in advance	Taxed normally
Annual holiday paid on termination	Extra Pay
Pay as you go	Taxed normally
Terminates before 12 months	Extra Pay
Terminates after 12 months	Extra Pay
Sick leave	Taxed normally
Bereavement leave	Taxed normally
Public holiday worked	Taxed normally
Public holiday taken	Taxed normally
Alternative holiday paid out on termination	Extra Pay
Family violence leave	Taxed normally