How annual leave works when an employee returns part-time after parental leave
It’s common for parents, particularly mothers, to return to work part-time after parental leave to balance career and family responsibilities.
Many employees assume that leave accrued while working full-time remains the same in hours, but in New Zealand, annual leave entitlements are measured in weeks, not hours. This means that when an employee’s work hours change, their leave balance in hours is recalculated to ensure they still receive the same number of weeks off.
Understanding how this works is key to ensuring compliance with employment law and providing clear communication to returning employees.
How annual leave entitlements change when work hours change
In New Zealand, all employees are entitled to a minimum of four (4) weeks of annual leave per year once they reach 12 months of continuous employment. However, the way this leave is measured depends on the employee’s work schedule at the time they take leave—not when they accrued it.
If employees return to work part-time, their leave balance in hours is recalculated so they still receive the same number of weeks off.
Key principle: Annual leave entitlement is based on the work pattern at the time leave is taken, not when it was accrued.
If an employee was full-time before parental leave and returns part-time, their leave balance is adjusted in hours to match their new schedule.
Example: adjusting annual leave when an employee returns part-time
Meet Mia, who earns $40 an hour.
Mia worked full-time (40 hours per week) before parental leave and had accrued two weeks of leave. This represents 80 hours of annual leave, and the value of her annual leave is $3,200.
Mia takes a year of parental leave, during which she accrues another four weeks, bringing her total annual leave balance to 6 weeks. Mia’s employer goes above the statutory entitlement and pays her the higher of her ordinary weekly wage and her average weekly earnings even on leave she became entitled to on parental leave.
If Mia decides to return to work full-time, her annual leave is equivalent to 240 hours (6 weeks x 40 hours a week). At $40 an hour, this is worth $9,600 to Mia.
If Mia decides to work part-time at 25 hours per week, her leave balance needs to be adjusted so that she still has six weeks of leave. This means her leave balance is adjusted to 150 hours (6 weeks x 25 hours per week). At $40 an hour, this is now worth $6,000 to Mia.
Key principle: The employee’s total leave in weeks stays the same, but the number of hours changes to reflect their new part-time schedule.
Why this matters for employers
This adjustment is important to understand for parents returning to work part-time so they can plan their time off effectively.
When parents choose to return to work on reduced hours, HR teams need to:
Clearly communicate how leave balances are adjusted to avoid confusion and frustration.
Update payroll and leave management systems to reflect new working hours.
Ensure parental leave policies provide guidance on what happens when work hours change.
Having a transparent and well-documented approach to leave entitlements helps employers create a positive experience for returning parents.
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Now for the important legal part: 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 1 April 2025.
Stephanie Pow
Founder & CEO of Crayon
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