Employment Leave Act 2026: what changes, and what employers need ready

The Employment Leave Act 2026 is the law that replaces the Holidays Act 2003. It sets the minimum annual leave, sick leave, bereavement leave, family violence leave, public holidays and alternative leave that New Zealand employers must give, and how each one is paid.

It received royal assent on 6 August 2026 and repeals the Holidays Act when it comes into force.

It comes into force on 6 August 2028. Each employee moves across at the start of their first pay period that starts on or after that date. For a weekly payroll that starts on Mondays, that is Monday 7 August 2028.

Until then the Holidays Act applies, and employers cannot adopt the new Act early.

Every employer and every employee in New Zealand: permanent, part-time, fixed-term and casual. Payroll providers have to change how leave is accrued, paid and recorded, and employers have to make decisions about each employee’s hours before the switch.

Leave is counted in hours, not weeks and days. Annual leave accrues at 0.0769 of an hour for every standard hour, about four weeks a year, from the first day of work. Sick leave accrues at 0.0385 of an hour per standard hour, about ten days a year for a 40-hour week, up to 160 hours.

All leave is paid at one leave payment rate, casual and additional hours earn a leave compensation payment instead of leave, the “otherwise working day” test for public holidays becomes a numeric test, and pay statements become compulsory for every pay period.

Yes. Under the Holidays Act, annual holidays are paid at the greater of ordinary weekly pay and average weekly earnings. Under the new Act, leave is paid by the hour at the leave payment rate: salary per standard hour for salaried staff, or the lowest hourly rate in the employment agreement for the shift for waged staff.

Commission, bonuses, incentives and allowances are left out of that rate, although fixed allowances keep being paid during the leave (section 119(2)(c)). So an employee whose pay includes regular commission or overtime will often receive less for a week of leave than under the Holidays Act.

Pay-as-you-go 8% holiday pay ends. Instead, every casual hour, and every additional hour a permanent employee works on top of their standard hours, earns a leave compensation payment of at least 12.5% of the ordinary hourly rate, paid in the same pay period. At an ordinary rate of $30 an hour that is $3.75 for each hour.

Casual staff do not accrue annual or sick leave under the new Act.

The new Act gives a numeric test for whether a public holiday is an “otherwise working day”. Where the employment agreement does not set the days, the day counts if the employee worked, or was on leave, on 50% or more of the same weekday in the 13 weeks before the holiday.

Working on a public holiday earns alternative leave hour for hour, instead of a whole day.

At the switch, annual holidays the employee is already entitled to convert at their ordinary weekly hours. The part-year since their last anniversary converts in proportion to the days that have passed, not at 8% of earnings.

Both formulas need the balance in weeks and the date of the last anniversary. A balance kept only in hours, or one that is wrong under the Holidays Act, carries straight into the new hours balance.

An employee working casual hours on the switch-over date is paid out their Holidays Act annual holidays on that date, and their Holidays Act sick leave ends. From then on they earn the leave compensation payment instead.

Sick leave days and alternative holidays convert to hours at the employee’s ordinary daily hours, worked out from the hours and days worked or on leave in the pay periods starting in the 93 days before the switch. That is why daily hours need to be recorded well before August 2028.

Yes, by 6 August 2029. For the first year the employer must meet both the old agreement and the Act, and whichever term is more favourable to the employee wins. From 6 August 2029 agreements must express leave the new way, or the Act’s minimums apply.

Five things, for every current employee: daily hours recorded for every day worked or on leave; standard hours that can be worked out from the agreement, a roster or a written notional roster; a decision on which hours are standard, additional or casual; correct Holidays Act balances in weeks and days, with anniversary dates; and a payroll set up to accrue leave per standard hour, pay the leave compensation payment and produce a pay statement every pay period.

The Act does not settle this in so many words. Standard hours are hours the employer may require and must pay for; additional hours are ones the employee can refuse. A common reading is that rostered overtime an employee cannot refuse counts as standard hours and accrues leave, while voluntary extra hours earn the leave compensation payment. Each agreement needs a decision.

An employee whose agreement sets standard hours but not the days or the hours each day, for example “24 hours a week, as rostered”, needs a written notional roster. The Act does not say when existing staff must have one; a cautious reading is to have them in place before 6 August 2028.

Yes. Repeal does not wipe historic liabilities. Claims for unpaid holiday and leave pay can generally go back six years, and the new Act offers an optional remediation process for settling Holidays Act liabilities. The regulations that set out that process are still being made.

The Employment Leave Act does not apply to anyone until their first pay period on or after 6 August 2028, so there is nothing to comply with yet. What you can check now is whether your payroll records and set-up are ready for it, and whether you comply with the Holidays Act today, because today’s balances carry across.

Our payroll compliance audit does both: a Holidays Act 2003 compliance check on every pay line, and an Employment Leave Act 2026 readiness check for every employee, reviewed and signed by two senior people.