Average Daily Pay
About the Author:
Paul Wilton (editor)
CA with degrees in commerce, accounting and information technology. Paul worked overseas in the “Big 4” accounting firms and served as a director at Audit New Zealand before setting up his own consultancy. Author of A-Z of New Zealand Business Law, Paul has over 20 years of experience as a business owner and consultant. He joined FBA in 2004 and is totally committed to providing excellence in quality and value to our subscribers.
Public holiday, bereavement and sick leave and alternative holiday payments are calculated using relevant daily pay or average daily pay (if applicable). Annual holidays are calculated differently.
Average daily pay (‘ADP’) may only be used if:
it’s not possible or practicable to work out relevant daily pay, or
an employee's daily pay varies in the pay period in question.
ADP is a daily average of the employee’s gross earnings over the past 52 weeks. This is worked out by:
adding up the employee’s gross earnings for the period, and
dividing this by the number of whole or part days the employee either worked or was on paid leave or holidays during that period.
For the purposes of calculating payments for holidays and leave
Gross earnings means all payments that the employer is required to pay to the employee under the employee’s employment agreement for the period during which the earnings are being assessed.
If all of the components of gross earnings are not included in the relevant calculations for holidays and leave, the employee is likely be underpaid and the employer will not comply with the Holidays Act 2003.
FBA Editor
The legal distinction between a contractor and employee is changing. Recently there have been a number of significant Employment Court decisions shaping the law in this area.