The Government will repeal and replace the Holidays Act 2003 with a new Employment Leave Act, aimed at simplifying leave entitlements and giving both employers and workers greater certainty.
Workplace Relations and Safety Minister Brooke van Velden announced the overhaul today, saying the reforms would fix a system that has caused confusion for years and cost billions in remediation payments.
Under the new law, annual and sick leave will be earned in direct proportion to hours worked, removing complex calculations that have plagued employers and payroll providers. Sick leave will now be taken in hours rather than days, giving workers more flexibility to match their real-life needs. Parents returning from parental leave will also be entitled to full pay for annual leave, ending what the minister called an unfair penalty on families.
Casual workers are set to benefit with a 12.5% upfront Leave Compensation Payment for each hour worked, replacing the current 8% Pay-As-You-Go system, effectively lifting their pay. Workers will also receive the same 12.5% compensation for hours worked beyond contracted agreements, rather than accruing additional leave.
Other key reforms include immediate access to bereavement and family violence leave from the first day of employment, mandatory pay statements that clearly show pay and leave entitlements, and expanded flexibility for cashing up annual leave – up to 25% of total balances each year.
Van Velden said the changes mark “a win for workers, a win for businesses, and a win for New Zealand,” with the focus on fairness, transparency, and simplicity. The new Employment Leave Bill will be followed by a 24-month implementation period to give employers and payroll providers time to adapt.
Image credit: charlesdeluvio
