There is an assumption floating around that once leave accrues by the hour, defining someone's hours will matter less. On the contrary - the opposite is true! Under the Employment Leave Bill, the type of hours an employee works will decide how their leave is treated, so getting hours right will matter more than it does today, not less.

Here is what the three types of hours will be, why the distinction is such a big deal, and where notional rosters come in.

A quick reminder: this is future legislation, coming into force in 2028. The current Holidays Act 2003 still applies until then.

Why hours will matter more, not less

There have been some statements floating around that because annual leave will just accrue on hours and not be ‘weeks’ based anymore, that employers won’t have to worry so much about defining a week or standard hours.

However, the new leave rules draw a firm line based on the type of hours worked. Standard hours will accrue annual and sick leave. Additional and casual hours will not, they will attract the new Leave Compensation Payment (LCP) instead - and at 12.5%, you’ll want to make sure you’re really clear on what gets included there. 

So the label on someone's hours will directly affect what they earn and what you owe. That is exactly why a clear, accurate picture of everyone's hours will be so important.

The three types of hours

The Bill will define each type specifically.

Standard hours will be the hours an employee is required to work under their employment agreement and that you must pay them for. Paid breaks will count. Hours under an availability provision will not.

Additional hours will be hours worked on top of standard hours where the employer is not required to offer the work, the employee can refuse it, and an additional payment is made for it. These will attract the LCP rather than accruing leave.

Casual hours will be hours worked by an employee whose agreement does not require the employer to offer work, or the employee to accept it. Casual hours attract the LCP too. An employee will not be able to have both standard and casual hours in the same role.

The catch is that these lines can blur over time. If a casual arrangement quietly settles into a regular pattern, those hours may really have become standard hours, with leave owing. The safest approach will be regular check ins to make sure what is written in the agreement matches how people actually work, and keeping payroll updated with each person's current standard hours. A "set and forget" approach will carry real risk.

Notional rosters: filling in the gaps

Plenty of people have standard hours without a fixed pattern. That is where a notional roster comes in. Where an employee has standard hours but their agreement does not spell out the number, the days, or the hours on each day, the employee and employer will agree a notional roster in writing when the agreement is signed. It gives leave something concrete to be accrued and taken against.

Notional rosters will need to be kept up to date, and they will not be used for public holidays, which will be handled through the Otherwise Working Day test.

What should employers do now?

No immediate action is required, because the current rules still apply until the new Act comes into force. But this is the area where a little groundwork will pay off most.

It is worth starting to think about standard hours for anyone who does not clearly have them yet. That might be employees whose hours have quietly settled into a regular pattern, or arrangements that were never really pinned down in writing. Getting a clear, honest picture of who works what, and making sure your agreements and payroll records reflect it, will put you in a strong position when the rules change, and it is good practice regardless. There is more detail on all of this, including worked examples and how notional rosters are set up, in our help centre.

More to come

This is very much a picture that will keep filling in. MBIE has said it will roll out further guidance and resources over the transition period, including technical guidance for payroll providers, which means more detail will land steadily between now and when the new rules take effect.

We will keep this content up to date as things firm up, and share more as we go, so you can expect the detail to arrive in manageable pieces rather than all at once right before the deadline. That is the job of a good payroll provider: to stay across every change and get the systems ready behind the scenes, so you are supported through the transition instead of left to decode legislation on your own.

Want to go deeper?

For the full detail, head to our Employment Leave Bill help centre. It covers each type of hours, notional rosters, worked examples and how it all ties into leave accrual and pay.

And if you are a PaySauce customer, you can go one better. Use the chat feature inside PaySauce to ask anything you like about the new leave rules. Just make it clear you are asking about the new leave entitlements or the Employment Leave Bill (for example, "how will standard hours work under the new leave rules?"), and you will get answers drawn specifically from our dedicated guidance on the changes, rather than the current rules. Ask away, that is what it is there for.

Hours and notional rosters FAQs

What are standard, additional and casual hours?
Standard hours are the hours an employee is required to work and be paid for under their agreement, and they accrue annual and sick leave. Additional and casual hours are worked on top of, or outside, standard hours and attract the Leave Compensation Payment instead of accruing leave.

What is a notional roster?
It is a written agreement that sets out an employee's standard hours (the number, days, or hours per day) where their employment agreement does not, so leave can be accrued and taken against a clear pattern. It is agreed when the employment agreement is entered into and kept up to date.

Should employers start defining standard hours now?
Employers should already have hours in agreements - we’ve written on this previously here:  https://www.paysauce.com/nz/blog-post/contracted-hours-availability-clauses-and-shift-cancellations 

But we deal with employers all the time who don’t have these, so we know it’s still common practice to have no agreed hours. Because the new system treats standard hours so differently from additional and casual hours, it is smart to start reviewing agreements and defining standard hours for anyone who does not clearly have them.

When will these changes take effect?
It comes into effect 6 August 2028.