Navigating public holiday pay after parental leave in New Zealand
A common area of confusion is whether the special rules that apply to annual leave payments after parental leave also affect public holiday pay. Here’s what you need to know if you’re planning your return or supporting employees through this transition.
Annual leave after parental leave: The “parental leave override”
When an employee takes annual leave that they became entitled to while on parental leave or within 12 months of returning, New Zealand law allows employers to pay this leave at their average weekly earnings over the previous 12 months. This is commonly referred to as the “parental leave override.”
When calculating the average, the time the employee was on parental leave is included. With unpaid weeks included, the average can be substantially lower than the employee's usual pay rate. A detailed explanation of how this calculation works can be found here.
Employers can choose to ‘top-up’ the value of annual leave and pay the higher of ordinary weekly pay or average weekly earnings, as they do with annual leave in other circumstances.
Public holiday pay: A different rulebook
Unlike annual leave, public holiday pay is not affected by the parental leave override. If an employee has returned to work and a public holiday falls on a day they would normally work, they are paid at their relevant daily pay (RDP) or average daily pay (ADP).
If an employee is on annual leave and a public holiday falls during that period, they are paid for the public holiday as if they had worked, and it does not come out of their annual leave balance.
Relevant daily pay (RDP)
Relevant daily pay is the amount an employee would have received if they had worked on a particular day, including their standard pay, any incentive payments, overtime, the cash value of any board or lodging provided, and other regular taxable allowances. Non-taxable reimbursements are excluded.
Average daily pay (ADP)
Average daily pay is calculated by taking the employee’s total gross earnings over the previous 52 weeks (or for the period they’ve worked if it’s less than 52 weeks), and dividing that by the number of days paid during that timeframe.
ADP can be used instead of RDP only if:
It’s not possible or practical to determine the RDP, or
The employee’s daily pay varies within the pay period.
Example
Joan is a salaried employee who returns to work on 1 December 2025. Her company has an annual two-week shutdown period from 22 December 2025 to 2 January 2026.
During this period, there are four public holidays:
Christmas Day: Thursday, 25 December 2025
Boxing Day: Friday, 26 December 2025
New Year’s Day: Thursday, 1 January 2026
Day after New Year’s Day: Friday, 2 January 2026
For the remaining six days, she takes annual leave that she became entitled to on parental leave.
This means her paycheck for those two weeks is:
4 public holiday days paid at her normal salary
6 annual leave days paid at her average weekly earnings only (the parental leave override)
Bottom line
The parental leave override is specific to annual leave payments and does not affect public holiday pay. After returning from parental leave, the calculation for public holiday pay follows the standard rules, regardless of whether the employee has recently taken parental leave.
Crayon’s Baby Prep Program helps employees plan ahead for the financial costs of parental leave, including annual leave, with personalised interactive tools.
Now for the important legal part: Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. The information we provide is general and not regulated financial advice for the purposes of the Financial Markets Conduct Act 2013. Please seek independent legal, financial, tax or other advice in considering whether the content in this article is appropriate for your goals, situation or needs. The information in this article is current as at 11 July 2025.
Stephanie Pow
Founder & CEO of Crayon
