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WHAT’S COMING NEXT FOR THE HOLIDAYS ACT

Upcoming Changes to New Zealand's Holidays Act: What Employers Need to Know

For many years, New Zealand employers have faced ongoing challenges interpreting and applying the Holidays Act 2003. The proposed Employment Leave Bill aims to simplify leave calculations, improve consistency, and reduce payroll complexity.

Although the Bill is still progressing through Parliament, it signals significant changes that every employer should begin preparing for.

Key Proposed Changes

Annual Leave

Under the proposed legislation:

  • Annual leave would begin accruing from an employee's first day of employment.

  • Leave would accrue based on contracted hours worked.

  • Leave balances would be recorded in hours rather than weeks.

  • Employees could take leave in hourly or part-day increments.

  • Greater flexibility would be available for cashing up annual leave.

Sick Leave

The proposal would also change how sick leave operates by:

  • Accruing sick leave from day one of employment.

  • Allowing employees to take sick leave in hours rather than full days.

  • Introducing an hours-based cap on accumulated sick leave.

Public Holidays

The Bill introduces clearer tests for determining whether a public holiday falls on an employee's "otherwise working day" and proposes new methods for calculating alternative holidays and public holiday entitlements.

Payroll and Record Keeping

Employers would also need to prepare for:

  • Leave records maintained in hours.

  • Standardised leave calculations.

  • Detailed payslips for every pay period.

  • Additional payroll reporting requirements.

What Employers Should Be Doing Now

Although these reforms are not expected to take effect immediately, the proposed implementation period provides businesses with an opportunity to prepare.

Employers should consider:

  • Reviewing employment agreements.

  • Assessing payroll software capability.

  • Auditing leave balances and payroll processes.

  • Updating HR policies and procedures.

  • Planning system and process changes well before implementation.

Looking Ahead

The proposed Employment Leave Act represents one of the most significant employment law reforms in recent years. Businesses that begin planning now will be better positioned to transition smoothly once the legislation comes into force.

As these reforms continue through Parliament, I will continue to provide practical updates and guidance to help employers stay informed and compliant.

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