{"id":23024,"date":"2026-08-09T20:22:09","date_gmt":"2026-08-09T20:22:09","guid":{"rendered":"https:\/\/nzsda.org.nz\/?p=23024"},"modified":"2026-08-09T21:46:47","modified_gmt":"2026-08-09T21:46:47","slug":"goodbye-holidays-act-what-the-new-employment-leave-act-means-for-employers","status":"publish","type":"post","link":"https:\/\/nzsda.org.nz\/index.php\/2026\/08\/09\/goodbye-holidays-act-what-the-new-employment-leave-act-means-for-employers\/","title":{"rendered":"Goodbye Holidays Act: What the New Employment Leave Act Means for Employers"},"content":{"rendered":"\t\t
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Goodbye Holidays Act: What the New Employment Leave Act Means for Employers<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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If you have ever struggled with holiday pay calculations, variable hours, \u201cotherwise working days\u201d, or whether a leave payment is correct, you are not alone. The Holidays Act 2003 has been difficult for New Zealand employers, payroll providers and employees for years.<\/p>

Change is now coming. The Employment Leave Act 2026 has been passed and will eventually replace the Holidays Act 2003 with a new approach to how annual leave, sick leave and other employment leave is earned, taken and paid.<\/p>

But the key message for employers is simple: don’t change anything yet.<\/strong><\/p>

There is a two-year implementation period. Until the new rules come into force, employers must continue complying with the Holidays Act 2003.<\/p>

What is changing?<\/strong><\/p>

The biggest shift is that annual leave and sick leave will move to an hours-based system. Annual leave will accrue in hours from day one, based on an employee’s standard hours of work, rather than becoming available as four weeks after 12 months. Sick leave will also accrue in hours and in proportion to standard hours, from the first day of employment.<\/p>

For employers, this should make balances easier to understand, particularly where working patterns vary. Instead of asking what a \u201cweek\u201d or a \u201cday\u201d means for a particular employee, leave will be shown in hours. It also means employees will be able to take part-days of sick leave in a way that better reflects real workplaces.<\/p>

This makes employment agreements more important than ever. Employers will need to clearly identify each employee’s standard hours, especially where staff regularly work additional hours, overtime, variable hours or casual shifts.<\/p>

Casual and additional hours<\/strong><\/p>

A key change is the introduction of a 12.5% Leave Compensation Payment for casual hours and additional hours. Instead of annual and sick leave accruing for those hours, the payment will generally compensate employees for leave on those hours.<\/p>

This will matter for businesses where employees work beyond their contracted hours to meet deadlines, complete installations, manage busy periods or respond to project demands. It will also matter for employers using casual employees. How standard hours, additional hours and casual arrangements are defined and recorded will become critical.<\/p>

Leave from day one and clearer pay information<\/strong><\/p>

Annual leave and sick leave will begin accruing from the first day of employment. Annual, sick, bereavement and family violence leave will also be accessible from day one, subject to the rules for each type of leave. This is a significant shift from the current framework and will require updates to onboarding information, employment agreements, policies and payroll processes once the new system is ready to be implemented.<\/p>

The new Act also introduces a more consistent hourly approach to leave pay. For many employers, this will be one of the most welcome changes because it should reduce the complex calculations that have made the Holidays Act so difficult to administer.<\/p>

Employees will also be able to request to cash up up to 25% of their total annual leave balance each year. This remains a request, not an automatic right, but it may provide more flexibility where large leave balances have built up.<\/p>

Mandatory pay statements are another important change. Employers will be required to provide clearer pay and leave information each pay period, reinforcing the need for accurate employment, hours, payroll and leave records.<\/p>

What should employers do now?<\/strong><\/p>

Prepare, but do not implement the new system yet. Current Holidays Act obligations still apply, and historical Holidays Act issues do not disappear because new legislation is coming.<\/p>

Use the implementation period to review the basics: are employment agreements up to date, do they clearly record standard hours, are additional hours being tracked, are casual arrangements genuinely casual, are leave and payroll records accurate, and does your payroll provider have a transition plan?<\/p>

Employers should also consider whether leave policies, agreement templates, onboarding documents and payroll processes will need updating before the new Act comes into force.<\/p>

Don’t panic \u2014 but don’t ignore it<\/strong><\/p>

The Employment Leave Act has been given a lengthy implementation period so employers, payroll providers and advisers can work through the changes. But two years can pass quickly, particularly for businesses with permanent staff, variable-hour employees, casual workers and people regularly working additional hours.<\/p>

You do not need to change your payroll today or rewrite every employment agreement tomorrow. But you do need to understand what is coming and start preparing carefully.<\/p>

For now, the message is clear: keep following the Holidays Act, start preparing for the Employment Leave Act, and do not leave the transition until the last minute. For more information call the team at Network HR.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

If you have ever struggled with holiday pay calculations, variable hours, \u201cotherwise working days\u201d, or whether a leave payment is correct, you are not alone.<\/p>\n","protected":false},"author":2,"featured_media":19841,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":["post-23024","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-advice"],"_links":{"self":[{"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/posts\/23024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/comments?post=23024"}],"version-history":[{"count":4,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/posts\/23024\/revisions"}],"predecessor-version":[{"id":23028,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/posts\/23024\/revisions\/23028"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/media\/19841"}],"wp:attachment":[{"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/media?parent=23024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/categories?post=23024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nzsda.org.nz\/index.php\/wp-json\/wp\/v2\/tags?post=23024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}