Changes to employee leave entitlements

Coming into effect on 6 August 2028 the Employment Leave Act will provide a simpler, clearer employee leave system.

We're here to help you through the changes

What's changing

An overview of all the key changes.

What you can do now

When the changes will take effect, and what you can do to prepare

Guides and Advice

Deep dives into all the changes and what they mean for your business.

What's changing?

New Zealand is replacing the Holidays Act 2003 with a new leave framework, the Employment Leave Act 2026. The aim is a simpler, clearer system that is easier to get right, with leave earned in hours rather than weeks and days.

The Employment Leave Act 2026 will come into effect on 6 August 2028, with the current Holidays Act 2003 continuing to apply until then.

Here's a quick overview of the key changes.

Current

Holidays Act 2003

Changing to

Employment Leave Act 2026

Annual leave

Four weeks added after each 12 months of continuous employment; held in weeks.

Accrues in hours from day one, at a minimum of 0.0769 hours per standard hour worked (about four weeks a year).

12.5% Leave Compensation Payment due on ‘additional’ hours instead of accruing leave.

Sick leave

10 days after six months, then again each year.

Accrues in hours from day one, at a minimum of 0.0385 hours per standard hour worked (about 10 days a year), capped at 160 hours.

Bereavement & family violence leave

Available after six months.

Available from day one for all employees.

How leave is paid

Several different calculations (average weekly earnings, ordinary weekly pay, relevant daily pay, average daily pay).

One hourly leave rate, used for every type of leave.

Leave Compensation Payment (12.5%) compensates people for additional hours.

Casual employees

"Pay as you go" (8% of gross earnings) is an option for casual or irregular work. Casuals may be entitled to sick leave.

A Leave Compensation Payment of 12.5% is paid on casual hours. This compensates casual employees for both annual and sick leave entitlements.

Public holidays

Whether a day is an "Otherwise Working Day" is judged case by case when it is not clear.

A clear test: where days of work are not set, a day counts if the employee worked (or was on leave) on 50% or more of that weekday over the past 13 weeks.

Alternative holidays

A whole day for working a public holiday; can be cashed up after 12 months.

Accrue by the hour (one hour for each hour worked on a public holiday); can be cashed up at any time.

Pay statements

No requirement to provide one. Must provide time, wage and leave records on request

Required every pay period.

When's it happening?

The changes take effect 6 August 2028. Until then, keep applying the current Holidays Act rules.

Employers will then have a further year (three years in total) to bring employment agreements into line with the new rules.

What you can do now

Keep your employment agreements, recorded hours and payroll records accurate and up to date.

Review your employees hours in their agreements. Standard hours are critical, as you will pay 12.5% Leave Compensation Payment on hours worked above this.

Get familiar with the changes now, even though no action is required until the new Act is in force.

Guides and Advice

Employment Leave Bill: What New Zealand employers need to know

August 2026

A small business guide to upcoming changes to the Holidays Act

Leave payments under the Employment Leave Bill: one rate to rule them all

August 2026

The current Holidays Act 2003 relies on a tangle of calculations. The Employment Leave Bill takes a very different approach.

Standard, additional and casual hours: your framework for accrual and payments

August 2026

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.

How annual and sick leave will accrue under the Employment Leave Bill

August 2026

One of the biggest shifts in the Employment Leave Bill is also one of the easiest to explain: leave will be earned by the hour, from day one.

Public holidays under the Employment Leave Bill: a clearer test and a few changes

August 2026

Public holidays are where a lot of payroll headaches live, usually starting with one deceptively simple question: would this person have worked that day anyway?

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