New Zealand Passes Employment Leave Bill Replacing Holidays Act

The New Zealand Government passed the Employment Leave Bill on July 29, 2026, repealing the Holidays Act 2003. The new legislation replaces the previous framework with an hours-based accrual system for annual and sick leave, allowing employees to access these entitlements from their first day of employment. Key features include a single hourly rate for all leave types and the ability for workers to cash up 25% of their annual leave balance each year.

To address casual and additional hours, the bill introduces a 12.5% Leave Compensation Payment in lieu of leave accrual. A 24-month lead-in period has been established to allow businesses, payroll providers, and software developers to update their systems and review employment agreements.

Workplace Relations and Safety Minister Brooke van Velden described the reform as a move toward a simpler and more workable system. The Employers and Manufacturers Association supported the change, with advocacy head Alan McDonald stating it delivers a practical system that resolves years of uncertainty and back-pay liabilities.

Opposition parties and the Public Service Association criticized the legislation. Labour MP Phil Twyford and PSA National Secretary Fleur Fitzsimons argued that the bill prioritizes administrative efficiency for employers over the needs of part-time and casual workers, with Fitzsimons claiming 200,000 workers could face pay cuts.