Setting up PAYG for annual leave (NZ)

If you have fixed term employees, or employees with changing work patterns, you might need to pay their annual leave at a pay-as-you-go (PAYG) rate of at least 8%. Some employees might need to be paid at a higher rate, depending on their contract.

To pay these types of employees, you need to create a PAYG pay item.

1. Go to the Pay Items screen (MPPP2210).
2. On the toolbar, click the New Pay Item icon.
3. Complete the Pay Item ID, Description and Payslip label fields.
4. On the Calculation Method tab:
   1. Set the Method to Percent Of.
   2. In the Percentage field, enter the PAYG percent agreed to in your employee's contract. For example, if you and your employee agreed to the minimum 8%, enter 8.
   3. From the % of dropdown, select Income eligible for Holiday Pay.
5. Save the pay item you created.
6. On the toolbar, click Pay Item Liabilities. The Pay Item Liabilities screen opens.
7. In the row for the PAYG pay item, select all the checkboxes, including Liable for Holiday Pay.
8. Save your changes to the pay item liabilities. You can now add the PAYG 8% pay item to an employee's standard pay.