Amount of parental leave payment

Some employees qualify for parental leave payments by adding together their hours from more than one job to meet the 10 hours a week criteria. For these employees, the ordinary weekly pay or average weekly income from their different employers will also be added together to work out their total ordinary weekly pay or average weekly income.

For each employment, ordinary weekly pay is the amount of pay that the employee receives under their employment agreement for an ordinary working week. It includes:

• productivity or incentive-based payments (including commission) if they are a regular part of the employee’s pay, and
• payments for overtime if these are a regular part of the employee’s pay, and
• the cash value of any board or lodgings provided by the employer to the employee.

It doesn’t include:

• productivity or incentive-based payments that aren’t a regular part of the employee’s pay, and
• payments for overtime that aren’t a regular part of the employee’s pay, and
• any one-off or exceptional payments, and
• any discretionary payments that the employer is not bound, under the terms of the employee’s employment agreement, to pay the employee, and
• any payment of any employer contribution to a superannuation scheme for the benefit of the employee.

If it isn’t possible to determine an employee’s ordinary weekly pay as above, the pay must be calculated in accordance with the following formula:

a − b
   c

where:

• ‘a’ is the employee’s gross earnings for the four calendar weeks before the end of the pay period immediately before the calculation is made, or if the employee’s normal pay period is longer than four weeks, that pay period immediately before the calculation is made, and
• ‘b’ is the total amount of payments which aren’t included (as above), and
• 'c' = 4

To work out average weekly income, the employee adds together all of their gross weekly earnings from all their employments for the 26 weeks out of the relevant 52-week period during which they earned the most money. (The relevant 52-week period is the period ending just before the child’s due date/birthdate or the date the employee or their spouse or partner becomes the primary carer of the child under six years.)

The weeks don’t have to be together, for example, some of the weeks where the employee earned the most might be in April-May, some in July, some in October, with the rest in December-February etc., but they must have a total of 26 weeks’ worth.

This total is divided by 26 to get the average weekly income.

Self-employed people choose whether their average weekly income is calculated over a 12- or six-month period. Over a 12-month period the person’s average weekly income is 1/52 of the person’s net income from self-employment over the last 12 months (ending just before the child’s due date/ birthdate or the date the employee or their spouse or partner becomes the primary carer of the child under six years). Over a six-month period, the person’s average weekly income is 1/26 of the person’s net income from self-employment over the last six months (ending just before the child’s due date or the date the employee or their spouse or partner becomes the primary carer of the child under six). (If a person’s gross income is more than their total deductions for a period, the difference is their net income).

If the self-employed person wasn’t working because they were:

• entitled to a payment of weekly compensation under the Accident Compensation Act 2001, or
• on parental leave before the expected due date of the child, or
• unable to work because of any other circumstances that are considered by a Labour Inspector not to disrupt the normal pattern of the person’s self-employment,

then the divisor (the number of weeks the net total income from self-employment is divided by, usually either 52 or 26) is reduced by the number of complete weeks the person wasn’t working.