  After years of frustration, remediation costs, and compliance confusion, the New Zealand Government has announced a full-scale overhaul of the Holidays Act 2003. The proposed replacement — the Employment Leave Act — promises to simplify entitlements, reduce administrative burden, and align leave accrual with actual hours worked. But what does this mean in practice?
Why the Change? The current Holidays Act is seen as “broken,” citing millions in remediation payments and widespread non-compliance. The new legislation aims to fix this by introducing a more intuitive, hours-based system that reflects modern work patterns. Key Changes at a Glance What’s Fair vs What’s Practical? The shift to hourly accrual is a win for payroll clarity, especially for SMEs and part-time-heavy sectors like retail and hospitality. However, part-time workers may see reduced sick leave entitlements — a move the government argues is proportionate, but which raises equity concerns. Casual employees will benefit from a higher leave compensation payment, but employers may face increased upfront costs. Meanwhile, parents returning from leave will no longer be penalised by reduced holiday pay — a long-overdue correction. Implementation Timeline If passed by late 2026 as currently estimated, the Employment Leave Act will include a 24-month transition period for most sectors, i.e. by 2028. Final Thoughts This reform is more than legislative housekeeping — it’s a recalibration of how we value time, flexibility, and fairness in the workplace. For employers, it’s a chance to reset systems and reduce compliance risk. For employees, it’s a step toward more accessible and transparent leave entitlements. As the bill moves through Parliament, now is the time for the businesses to engage, prepare, and ensure their payroll systems are ready for change. If you’re navigating payroll compliance or want to discuss how this affects your business, feel free to connect. Let’s make leave simpler, fairer, and future-proof
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