Blog

For more than 20 years, the Holidays Act 2003 has governed how annual leave, sick leave, public holidays and other leave entitlements work in New Zealand. While well-intentioned, the Act has become widely recognised as overly complex and difficult to apply, especially in modern workplaces with variable hours, casual work and multiple pay components. 

In March 2026, the Government introduced the Employment Leave Bill, intended to repeal and replace the Holidays Act 2003 with a simpler, more predictable framework. The new Bill aims to reduce payroll errors, improve compliance, and make leave entitlements easier for both employees and employers to understand and administer.  

What are the key proposed changes? 

This document provides a snapshot of the key changes proposed in the Employment Leave Bill: key-changes-employment-leave-system-factsheet.pdf

What do employers need to do now? 

Keep up to date 

The Bill was released into parliament March 2026, and submissions are now open until 14 April 2026. You can read more: here and here.  

At its first reading the Bill had cross parliamentary support and many commentators believe that the Bill will pass later this year without significant changes. However, we’re in an election year so it would be wise to consider how this may impact whether the Bill passes this year. 

Until it takes effect, employers must continue to comply with the Holidays Act 2003. Employers are still liable for any breaches of the Holidays Act pre and post the Employment Leave Bill comes into force. 

If the Bill passes… What does this practically mean for employers? 

If the Employment Leave Bill becomes law, employers will need to be ready for a meaningful shift in how leave is calculated, managed, and communicated across their businesses. While the new framework is designed to simplify things in the long run, the transition itself will take some planning. This is a great moment to get ahead of the change, understanding what’s coming, preparing your systems and agreements, and giving your people clarity about what to expect.  

Review Employment Agreements and Initiate Consultation 

As the new leave framework approaches, employers will need to check that their employment agreements and policies align with the upcoming changes. Starting early conversations with your team will help set clear expectations and make the transition smoother for everyone. 

What to do: 

• Employers will need to ensure their agreements and policies comply, once the Bill is passed into law. 

• Once the Bill is passed consult with employees early about likely future changes, explain how the new system will work, signal that agreements will need to change closer to commencement, plan system and payroll changes internally. 

Review Payroll System and Transition if necessary 

If you employ staff or manage payroll, now is the right time to start understanding how an hours based leave system could affect your contracts, payroll systems, and employment practices.

What to do: 

• All reputable payroll systems will implement these updates HOWEVER there are a few systems still available that are no longer supported. These systems will not have changes implemented. 

• Don’t leave this until the last minute, there will be many employers seeking to update their payroll system, don’t be left in a transition queue! 

The Unlimit team are here if you need our support through these potential changes. Get in touch!