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The transition period is an opportunity to prepare. The first technical advice from MBIE confirms this is a whole-business change, not simply a payroll project.

When the Employment Leave Act 2026 was passed, for many the focus is on the payroll implications.

After all, the legislation changes how leave is accrued, recorded, taken and paid. Payroll systems will need to adapt, and many providers are already planning for those changes.

However, MBIE's recently released technical advice reinforces something that we at Unlimit knew: this is not just a payroll project. It is a business-wide change.

The organisations that are likely to transition most successfully will be those that look beyond payroll and start considering the impact across workforce planning, employment documentation, policies, budgeting and operational processes.

The good news is that there is still time. The Act does not come into force until 6 August 2028. But that time should be viewed as an opportunity to prepare, rather than a reason to wait.

More Than a Change to Leave Calculations

One of the themes running through the technical advice is the importance of understanding how work is actually performed within your organisation.

The Employment Leave Act introduces new concepts such as standard hours, additional hours and casual hours. Employers will need to understand which category of work applies to different employees, how that work is documented, and how changes are managed over time.

For many businesses, that means asking questions that have little to do with payroll software.

Do your employment agreements accurately reflect how people work today? Are hours of work clearly defined? Have work patterns evolved over time without the documentation keeping pace? Do managers understand the difference between permanent changes to hours and temporary variations?

These are people, process and governance questions as much as they are payroll questions.

The Financial Impact Needs Assessing

While much of the conversation has focused on leave calculations and payroll compliance, organisations also need to turn their attention to the broader question: what will the Employment Leave Act mean for the financial performance of the business?

The answer will be different for every organisation. The impact may depend on industry, workforce structure, employment arrangements, roster design, labour utilisation, existing leave liabilities and the way labour costs are recovered from customers.

For some businesses, the legislation may influence labour costing models and future budgeting assumptions. For others, it may affect pricing decisions, project costing, charge-out rates or service delivery models. The only way to understand the potential impact is to start assessing it.

Rather than waiting until 2028, organisations have an opportunity to model scenarios, understand possible cost implications and build any required adjustments into future budgets and business plans. This is particularly important for businesses where wages form a significant proportion of operating costs.

Workforce Planning Is Part of the Solution

One of the strongest themes emerging from MBIE's technical advice is the need for employers to clearly understand how work is performed across their organisation. The concepts of standard hours, additional hours and casual hours place greater emphasis on accurately documenting working arrangements and ensuring they reflect reality.

This does not mean reducing headcount or limiting workforce flexibility. In fact, for many organisations it is an opportunity to strengthen workforce planning.

Good workforce planning is about ensuring the business has the right people, in the right roles, working under arrangements that meet operational needs while supporting compliance. It helps organisations understand their current workforce, identify future capability requirements, manage growth, respond to seasonal demands and make informed decisions about how work is structured.

The Employment Leave Act provides a valuable reason to review whether employment agreements, hours of work, rostering practices and workforce strategies still align with how the business operates today. Organisations that use this transition period to improve visibility of their workforce are likely to gain benefits that extend well beyond legislative compliance.

Compliance Will Depend on Good Documentation

MBIE's advice highlights the importance of ensuring employment agreements and recorded work arrangements accurately reflect the work employees actually perform.

Over the next two years, organisations will need to review employment agreements, policies and internal procedures so they support the new framework. By 2028, compliance will depend not only on what a payroll system can calculate, but also on the quality of the information and documentation behind those calculations.

What Does This Mean for Me?

If you're a business owner or part of the leadership team, now is the time to think beyond payroll. The Employment Leave Act has implications for business planning, workforce strategy, budgeting, governance and risk.

If you're responsible for HR or people capability, your focus is likely to be understanding how employment arrangements are documented, how workforce practices align with those documents, and what changes may be needed over the next two years.

If you're in payroll, preparation remains essential. But successful implementation will rely on accurate information coming from across the business, not payroll alone.

Regardless of your role, the key question is no longer whether change is coming. The question is whether your organisation is using the transition period to prepare effectively.

How Can Unlimit Help?

At Unlimit, our People Strategy and Capability team, are helping organisations look beyond the legislation and focus on practical readiness.

That includes reviewing employment agreements and documentation, assessing payroll readiness, supporting workforce planning, evaluating potential labour cost impacts, modelling future scenarios and developing realistic transition plans.

Most importantly, we help organisations approach the Employment Leave Act as a business change programme rather than simply a compliance exercise.

Because when August 2028 arrives, compliance will not be determined solely by the payroll system you use. It will depend on whether your people, processes, documentation and systems are all working together to support the new framework.

The organisations that start preparing now will have more time to make thoughtful decisions, spread the workload and build confidence in their approach.

If you would like the support of the Unlimit team, get in touch