Top-up vs full pay: what’s right for your parental leave policy?

When building or improving a parental leave policy, one of the biggest decisions is how to support primary carers financially. Should your organisation:

• Top up government-paid parental leave (PPL) by paying the difference between PPL and the employee’s salary?

• Or provide full pay, covering an employee’s full salary, regardless of PPL?

Both options come with trade-offs. Here’s a breakdown of key considerations, employer trends, and real examples to help you find the best fit for your people and your budget.

---

What are other NZ employers doing?

According to Crayon’s 2024 Parental Leave Trends report, among employers offering paid leave:

• 54% offer top-ups

• 41% offer full pay

• 5% use another approach

This data, drawn from The NZ Parental Leave Register, is a valuable benchmark to support internal discussions with leadership or your board.

Key considerations when choosing between top-up and full pay

Budget: What’s more cost-effective?

Full pay generally costs more for two reasons:

• You’re paying the full salary in addition to PPL

• Uptake is higher—particularly among partners and fathers—because it’s easier to access

Top-up tends to reduce total spend but can be less flexible and inclusive.

International consistency: Do you operate in multiple countries?

If you’re an employer with operations in more than one country, full pay is often easier to standardise across different jurisdictions, whereas top-ups depend on local government schemes.

Equal pay: Are you aiming for a gender-equal policy?

Companies with equal-paid parental leave (same benefits for all parents, regardless of gender or carer role) often choose full pay. It supports inclusion, equity, and consistency, especially for non-birthing or same-sex parents.

Flexibility: How much control do you need?

Full pay offers more freedom because as the employer, you set the eligibility and how leave is used.

Top-ups are tied to New Zealand’s government-paid leave rules, which can be limiting (e.g. must be used within the first 26 weeks).

• Can leave be used outside the first 6 months?

  • Full pay: leave can be used within the period that the employer sets. On the register, we've seen up to two years from the child's arrival.

  • Top-up: Leave must be used within the PPL period, which is generally within the first 26 weeks after the child’s arrival. The legislation requires PPL to start by the date the child arrives unless the employee has other paid leave they wish to use first. 

• Can parents tag team and take leave one after the other?

  • Full pay: Possible within the period the employer sets. For example, you could allow partners to become the primary caregiver when the other parent returns to work, even if this is six or 12 months after the child's arrival.

  • Top-up: Only possible within the PPL period. By default, the pregnant person is the Primary Carer, and they can only transfer it once to the other parent within the 26-week PPL period. Note: PPL transfers happen in less than 5% of cases (MBIE).

• Can parents take paid leave at the same time?

  • Full pay: Yes, this. is possible because the employer sets the rules.

  • Top-up: This is not possible. Even if parents are splitting one PPL entitlement, they cannot receive it at the same time.

• Can a working parent can support a stay-at-home parent?

  • Full pay: Yes this is possible because the employer sets the rules.

  • Top-up: This is not possible. A stay-at-home parent doesn't qualify for PPL and therefore has no entitlement to transfer.

Real examples: Making top-ups more flexible

More employers are modifying traditional top-up policies to provide more flexibility. Here are two examples:

Example #1: Broadening eligibility

Buddle Findlay offers top-ups from day one of employment. If an employee doesn’t qualify for PPL (e.g. a father taking on the primary carer role after the first 6 months), they still receive their full salary.

Example 2: Giving primary carers a choice

Simpson Grierson lets primary carers choose between:

• 26 weeks of top-up, or

• 12 weeks of full pay (if becoming the primary carer after PPL ends)

This hybrid approach supports a range of family situations and leave timelines.

---

Find the right fit for your business

Not sure which approach works best for your team or your budget?

Crayon’s free Top-Up vs Full Pay Comparison Tool helps you model the cost and value of each option based on your real salary data and leave structure.

---

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 27 March 2025.

---

Stephanie Pow

Founder & CEO of Crayon

---

Related articles