Contact Us
Hero Image

Long Service Leave

Annual Leave

23 May 2025 (Last updated 3 Dec 2025)

Share on:

In New Zealand, there is no legal requirement on employers to offer long service leave and benefits. Despite this, many employers choose to offer long service entitlements as a way to recognise and acknowledge long serving employees. The conditions regarding additional long service entitlements can either be negotiated between an employer and employee as part of the collective or individual agreement or form part of the company’s policies.

What is Long Service Leave?

If an employee has been working for the same employer, or group, for a long period of time, they may be entitled to long service leave and other benefits. As employers are not legally required to offer long service leave, the conditions of long service entitlements will always be different.

If an employer chooses to offer long service leave, the employment agreement or company policy should clearly set out:

  • The length of time an employee must work to qualify for long service entitlements
  • How much long service leave the employee will receive
  • Any other additional long service benefits the employee may receive

How is Long Service Leave Payment Calculated?

In most cases, employees receive the ordinary pay rate during their time on long service leave. The ordinary pay rate is the amount an employee receives during normal work hours and does not include:

  • Overtime or penalties
  • Shift loadings
  • Allowances

If an employee’s pay rate is not constant and can change in certain situations, there are one of two ways you can calculate an amount that closely matches their ‘ordinary’ pay rate:

  • The amount of ordinary payment the employee will receive from the time they take leave
  • The average weekly amount the employee has earned in the past 52 weeks

For long service leave entitlements, the greater of both amounts is always the one to choose.

Keep in mind, long service leave is considered part of the employee’s leave entitlements so any unused leave must be paid at the end of the employment relationship, in the same way that annual leave is paid out.

Eligibility

The amount of time an employee must work for the same employer, or group, to receive long service leave depends on their employment agreement or the company’s policy. Some employers may offer an extra week of long service leave after every five years of continuous service for example while others may offer additional long service leave and a one-off payment after 10 years of continuous service.

An employee does not have to retain the same position, duties, rate of pay, and responsibilities to be entitled to long service leave. Even if these change, as long as they work for the same employer or group – their service will still be deemed as continuous – they will be entitled to any long service leave based on the agreement or policy.

For advice on how to incorporate leave entitlements into your employment agreement, contact Employsure on 0800 568 012.

Have a question?

Have a question that hasn't been answered? Fill in the form below and one of our experts will contact you back.

By clicking submit you consent to our Privacy Policy

Related Guides

Annual Leave

Annual Leave

Annual Leave

Garden leave

Garden leave or Gardening leave is where your employee is not required to attend the workplace but continues to receive their full pay for the duration of their notice period. A garden leave clause is outlined in employment contracts and is enforceable when an employee resigns or is terminated and is required to stay away from the office. The employee does not need to perform their duties during this notice period.  It is a protectionary measure that was created to prevent employees from taking proprietary information to competitors. Garden leave is mainly used in Australia, United Kingdom, and New Zealand but it was also introduced in Massachusetts in 2018, thus becoming the first state in U.S to have it. Understanding garden leave in Australia Garden leave is when an employee leaves a job and is required to stay away from work during their notice period. They receive their full pay and can work from home or not at all.  Employees are physically cut off from work and the office space and communicating with certain colleagues. It is a precautionary measure taken by employers to protect confidential information. It does not indicate mistrust or that the employee has committed some indiscretion but is a measure to ensure company information is protected. It also allows the employer to recall the employee back to work if urgent / they fall short on staff or need someone to cover shifts. Why is it called garden/gardening leave? As the employee cannot take up work elsewhere or work from home, they have time to take up hobbies (such as gardening) while getting paid. It is called garden leave, gardening leave, or gardener’s leave.  Initially the term had negative connotations, implying that an employee was suspended and is unfit for anything other than tending to a garden. Reasons for garden leave If an employee has resigned or been dismissed, you may consider putting them on garden leave. This will act as a safeguard against future repercussions or any sabotaging behaviour the employee may indulge in. Garden leave allows you to change or remove the employee’s access to confidential information. This can include financial information, account details, credit card access, client details, etc. Similarly, you can add a no-compete clause or restraint of trade clause in the employment contract which prevents employees from leaking or sharing information with competitors. Benefits of a garden leave clause Having an employment contract that consists of a garden leave clause can benefit you and your business. If you are hiring an executive or manager who has access to sensitive information, a garden leave clause is essential.   Other benefits include: Protects essential client information. Allows you to manage and control access to all information and systems. Creates a period in which the former employee cannot work for competitors. Ensures you part ways on good terms. Ensures the employee can work from home or other locations and continue getting paid. Prepare for all eventualities. If the separation is due to a hostile situation, it allows for both parties to separate without creating financial complications. Things employers need to remember Not all employees can be put on garden leave. As an employer, you must remember to ask yourself few questions before you put an employee on garden leave: Is the employee leaving on bad terms? Is the employee going on to work for a competitor? Will the departure of the employee expose the business to risk? Are there legal restrictions in place preventing garden leave? How will the transition period look like? What will the duration of the garden leave be? Do I have an existing Garden Leave clause in the employment contract? Employees continue to be paid even when they are on garden leave. So, before you place any employee on garden leave, you must consider this additional expense and its impact. You also need to confirm with your legal team or get legal advice if this employee can be placed on gardening leave. Things employees need to remember The employment agreement must set clear terms for employees during their garden leave.   Some things employees need to remember: They must abide by the terms of the employment agreement. They must be contactable during the notice period. They cannot work for another employer during the notice period. They continue to receive pay. They may receive holiday pay and sick leave if outlined in the contract. They cannot be placed on gardening leave indefinitely or for an extended period. They cannot be forced to go on garden leave. Grow with Peninsula If you require further assistance understanding different types of leave and how they impact your business, you can reach out to Peninsula. Call our 24/7 Advice Line today to get all your tricky questions answered. This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.

View all guides

Do you have any questions regarding Annual Leave?

International Sites

United Kingdom

Republic of Ireland

Northern Ireland

Scotland

Canada

Australia

© 2026 Peninsula Employment Services Ltd. Registered Office: 8 Tangihua Street, Auckland CBD 1010

Peninsula Protect is a discretionary risk product issued by Peninsula Mutual Limited ACN 630 256 478 AFS Licence No. 544232. Peninsula Mutual Limited has appointed Peninsula Group NZ Limited NZBN 9429042175179 to distribute the discretionary risk product in New Zealand. To decide if this product is right for you, please read the Peninsula Protect Product Disclosure Statement (PDS) and Target Market Determination.