New Zealand passes Employment Leave Bill, revamping the Holidays Act

The New Zealand Parliament has approved the Employment Leave Bill, repealing the Holidays Act 2003 and introducing an hours‑based accrual system for leave. Annual and sick leave will now accrue in direct proportion to an employee’s standard hours, and annual, sick, bereavement and family‑violence leave become available from the first day of work. A single hourly rate will apply to all leave types, and a 12.5% Leave Compensation Payment will replace traditional accrual for additional and casual hours. The legislation also mandates pay statements that itemise pay and leave, and permits workers to cash up to 25% of their total annual leave each year.

The Bill provides a 24‑month transition period for businesses, payroll providers and software developers to update systems, with an additional year for employers to amend employment agreements. BusinessNZ chief executive Katherine Rich and EMA advocacy head Alan McDonald hailed the reform as ending a two‑decade‑long “headache”, noting that the previous Act had generated hundreds of millions of dollars in remediation costs. Health New Zealand reported about $961 million in leave‑calculation errors for roughly 220,000 current and former staff, while the labour inspectorate recovered over $237 million for more than 22,700 employees between 2015 and 2020.