Supreme Court of New Zealand · [2021] NZSC 157

Tourism Holdings Ltd v A Labour Inspector

The Supreme Court held that commission payments made about monthly were a regular part of a tour driver guide's pay and had to be included...

Supreme Court of New Zealand15 Nov 2021

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Quick read

Variable pay does not fall outside holiday-pay calculations merely because it is lumpy or reconciled after the work.
The Supreme Court held that commission payments made about monthly were a regular part of a tour driver guide's pay and had to be included when calculating ordinary...

Use this to check

Regularity under section 8(2) is assessed against four weeks
Monthly average commissions can be a regular part of pay
Payment timing does not by itself decide which work period commission relates to

Decision snapshot

What happened
- Tourism Holdings paid driver guides a daily rate plus commission on activities booked for tour customers.
- Tours often lasted longer than a week, and commissions were reconciled after a trip.
- Over just over 30 months, one driver guide received 29 commission payments covering 31 commission periods.
- When she took annual holidays, the parties disagreed about whether those uneven payments formed a regular part of her pay.
What the court had to decide
- For the Holidays Act calculation of ordinary weekly pay, must commission be regular within each week, or can regularity be assessed across the four-week period used by the statutory formula?
What the court decided
- The Supreme Court held that payments are a regular part of pay if payments of that kind are made regularly when assessed against a four-week period.
- The driver's commissions, paid monthly on average, met that standard and were included in ordinary weekly pay.
- The Court also rejected Tourism Holdings' proposed method for allocating commissions to a period.

Practical impact

Practical read

Variable pay does not fall outside holiday-pay calculations merely because it is lumpy or reconciled after the work.
Employers need payroll rules that test recurring commissions and incentives across the period required by the Holidays Act.

Useful next steps

Regularity under section 8(2) is assessed against four weeks
Monthly average commissions can be a regular part of pay
Payment timing does not by itself decide which work period commission relates to
Employment agreements and payroll configuration should describe entitlement consistently
List every commission, incentive, allowance and bonus code in payroll

How the driver guides were paid

Tourism Holdings operated multi-day coach tours. Driver guides received a daily rate and earned commission when customers booked activities during a tour.

Commission was not a neat weekly amount. Trips and commission periods could run for longer than a week, and figures were reconciled after the tour. One driver's payments ranged from $186.28 to $5,514.16. Across just over 30 months, she received 29 payments covering 31 periods, averaging about $2,571.93 each.

Why the answer changed holiday pay

For annual holidays, the Holidays Act required payment based on the greater of ordinary weekly pay at the start of the holiday and average weekly earnings over the previous 12 months.

Where an employee had no ordinary working week, section 8(2) used a four-week calculation. Certain incentive payments could be subtracted if they were not a regular part of pay. Tourism Holdings argued that regularity still had to be tested week by week, which would remove most commissions from ordinary weekly pay.

Approach	Effect
One-week regularity test	Most commissions would be excluded from ordinary weekly pay.
Four-week regularity test	Monthly average commissions could be included.

The Supreme Court chose a four-week test

The Court held that the statutory context supplied the answer. Section 8(2) assesses earnings over four calendar weeks, so that is the period for deciding whether a kind of payment is regular.

The driver's commissions were paid monthly on average and were sufficiently regular. The Court also held that commissions related to when the booked activity was sold and, for a third-party activity, when it was taken, provided the commission had become payable before the holiday.

What the court focused on

List every commission, incentive, allowance and bonus code in payroll
Record whether the employment agreement requires the payment
Check how often payments of that kind occur across four-week periods
Document when entitlement arises and which work period it relates to
Sample-check annual-holiday payments for variable-pay employees

Common questions

Did every commission have to be paid each week?

No. The Supreme Court rejected a one-week test for section 8(2). Payments of the relevant kind were assessed for regularity over four weeks.

Are all bonuses and commissions included in holiday pay?

No. The result depends on the payment terms, whether payment is required under the employment agreement, its regularity and the relevant Holidays Act calculation.

Is the Holidays Act still being replaced?

The Employment Leave Bill is progressing through Parliament, but the Holidays Act 2003 remains the current law unless and until replacement legislation commences.

How Sprintlaw can help

Employment Agreements Employment Law

Update history

Case27 July 2026

Commission and holiday-pay Supreme Court guide added

The library now explains the Supreme Court's four-week test for deciding when recurring commission is a regular part of pay.