New Zealand Employment Leave Act 2026: What employers need to know

New Zealand is preparing a significant change to employment leave legislation.

The Employment Leave Act 2026, which received Royal assent on 6 August 2026, will replace the Holidays Act 2003 when comes into operation on 6 August 2028.

For employers, the two-year implementation period provides time to prepare. And while August 2028 may seem a long way off, the changes extend beyond simply updating leave policies. They could also affect your payroll, workforce data, working arrangements, systems, and existing leave balances

So, what should New Zealand organisations know — and what should they be thinking about now?

Here are 12 common questions and answers about the Employment Leave Act 2026 and what it could mean for employers.

Note: This article provides general information about the Employment Leave Act 2026, with a focus on workforce, payroll, and technology considerations, and not legal advice. Employers should refer to official guidance from Employment New Zealand and seek professional advice regarding their specific obligations.

New Zealand Employment Leave Act 2026 at a glance

• What is changing? The Employment Leave Act 2026 will replace the Holidays Act 2003.
• When does it take effect? 6 August 2028.
• What applies until then? The Holidays Act 2003 continues to apply, and employers should refer to Employment New Zealand for guidance regarding obligations during the transition.
• Who does it affect? New Zealand employers and employees covered by the legislation.
• What areas are changing? The new framework affects annual leave, sick leave, other statutory leave, public holidays, and the treatment of different working arrangements.
• What should employers do now? NZ employers can use this implementation period to assess potential impacts across their people, policies, processes, workforce data, and technology.

1. What is the Employment Leave Act 2026, and when does it take effect?

The Employment Leave Act 2026 is New Zealand’s new employment leave legislation, replacing the Holidays Act 2003. It will take effect on 6 August 2028.

The new legislation follows years of discussion about the complexity of the Holidays Act, particularly when applying its requirements to modern and variable working arrangements.

Until then, the Holidays Act 2003 continues to apply, and employers should refer to Employment New Zealand for guidance regarding their obligations during the transition. The two-year implementation period gives organisations time to understand the new requirements and assess what they may need to change across policies, payroll, workforce management, employment arrangements, data, and supporting technology.

2. What are the biggest changes from the Holidays Act 2003?

The Employment Leave Act introduces a new framework for calculating and managing employee leave, with significant changes to annual leave, sick leave, public holidays, and how different types of working hours are treated.

Some of the major changes include:

For employers, there’s more to prepare for than new leave calculations. You’ll also need to consider the workforce data behind them and how it moves between HR, workforce management, and payroll.

3. How will annual leave change under the Employment Leave Act?

One of the most significant changes is that annual leave will move to an hours-based system, with employees accruing annual leave from the start of employment.

Under the new framework, an employee's working hours become important to determining their annual leave accrual. An employee accrues at least 0.0769 hours of annual leave for each standard hour or part of a standard hour. This is intended to provide a clearer approach than the existing framework, particularly where employees' working arrangements change.

For employers, the practical consideration is not only how leave will be calculated but whether the underlying information needed for those calculations is accurate and readily available.

It’s worth looking at how you currently record and share employment terms, scheduled hours, actual hours worked, leave, and payroll information.

4. What are standard, additional, and casual hours — and why do they matter?

The Employment Leave Act introduces standard, additional, and casual hours as important concepts for determining how employees receive leave or leave compensation.

At a high level:
 

• Standard hours represent an employee's established working hours under the new employment agreement, the employer may require the employee to work and must pay the employee.
• Additional hours are qualifying hours worked beyond those standard hours.
• Casual hours apply to qualifying work performed under casual working arrangements.

How an employee's hours are categorised can affect how leave or leave compensation applies, so organisations will need to understand the working arrangements of different employee populations.

Employers may need reliable information about employment arrangements, scheduled hours, actual time worked, and payroll outcomes. When that information is spread across separate systems or relies heavily on manual processes, administering the new framework could become more difficult.

Having HR, time, workforce management, and payroll information in a single solution can help organisations establish a more consistent view of how people are working.

5. How will the new rules affect casual and variable-hours employees?

The Employment Leave Act introduces new approaches intended to provide clearer leave treatment for employees who work casual, additional, or variable hours.

For qualifying additional and casual hours, the new framework includes a leave compensation payment of at least 12.5% of the employee’s ordinary hourly rate for each relevant hour, instead of accruing annual and sick leave on those hours. This makes understanding employees' actual working arrangements particularly important for organisations with hourly, shift-based, seasonal, or variable workforces.

Employers may want to identify these employee populations early and assess how their working arrangements are currently captured across employment records, scheduling, time and attendance, and payroll.

For organisations managing large or complex workforces, connecting these areas can help reduce manual handoffs and provide payroll teams with more consistent information about when and how employees worked.

6. How will sick leave and other types of leave change?

The Employment Leave Act also changes how sick leave and other statutory leave entitlements are provided and administered.

Changes affect areas including sick leave, bereavement leave, family violence leave, and alternative leave. For example, the new framework changes how sick leave accrues rather than relying on the existing entitlement model. Sick leave accrues from the start of employment at a rate of at least 0.0385 hours for each standard hour or part of a standard hour, subject to the statutory cap. Employers should refer to Employment New Zealand guidance for detailed eligibility and calculation requirements as implementation approaches.

From an operational perspective, organisations should consider which leave policies, payroll configurations, employee records, and communications will need to be updated before August 2028. Managers and employees will also need to understand how the new framework affects the way leave is earned, viewed, requested, and managed.

7. What happens to employees' existing leave balances when the new Act takes effect?

Transitional rules will determine how existing leave entitlements move into the new framework. This is particularly important for annual leave because organisations will be moving from the current framework to an hours-based model.

For payroll and HR teams, the transition makes the accuracy of existing leave information especially important. Organisations should understand what balances they hold, how those balances are represented in their systems, and how they will need to be treated when the new legislation takes effect.

Rather than waiting until 2028, employers may want to use the implementation period to review leave data and identify inconsistencies or manual workarounds that could complicate the transition. This also creates time to plan configuration changes, migration activities, and testing before go-live.

8. How will public holiday rules change?

The Employment Leave Act changes aspects of how public holiday entitlements are determined and administered, including the framework that establishes whether a public holiday would otherwise have been a working day for an employee. Working patterns and schedules will continue to play an important role in determining public holiday treatment.

For employers with shift-based or variable workforces, reliable roster, time, and employee information can therefore be important when administering public holiday requirements.

Organisations should review detailed Employment New Zealand guidance as it becomes available and consider how any changes will affect workforce management processes, payroll rules, and employee communications.

9. What will the Employment Leave Act mean for payroll and HR systems?

The Employment Leave Act could require employers to make changes across payroll, HR, workforce management, time and attendance, and leave systems before August 2028.

Depending on an organisation's workforce and existing technology, areas to assess could include:
 

• How annual and other leave accrues
• How leave balances are recorded
• How standard, additional, and casual hours are identified
• How time worked and schedules feed into payroll
• How leave compensation payments are calculated
• How public holidays are administered
• How existing leave balances transition to the new framework
• How payroll calculations and system changes will be tested

A useful starting point is understanding how these processes work today. Where does the information needed to calculate leave and pay live? Does it move automatically between HR, rostering, time and payroll? Where do teams currently rely on spreadsheets, manual calculations, or workarounds?

Answering these questions can help organisations identify where technology or process changes may be needed well before implementation.

10. What should organisations review in their existing HR and payroll systems?

The Employment Leave Act introduces changes that may require organisations to update how their HR, payroll, time, and workforce management systems are configured, or assess whether their existing technology can support the changes.

Employers should consider whether their systems can:
 

• Support new leave accrual and calculation rules, including hours-based annual leave.
• Capture and distinguish standard, additional, and casual hours.
• Accommodate leave compensation payments and changes to public holiday rules.
• Support transitioning of existing leave balances
• Connect employee, roster, time, leave, and payroll data relevant to calculations

Now is a good time to identify technology and data gaps, understand what configuration or system changes may be required, and engage technology providers about their plans to support the new requirements.

For organisations managing complex workforces, a single HCM solution such as Dayforce can help connect HR, time, workforce management, and payroll data, which can help reduce manual handoffs and providing a more consistent view of workforce information as requirements evolve.

11. What should New Zealand organisations be doing now to prepare for August 2028?

Although the Employment Leave Act does not come into force until August 2028, organisations can use the implementation period to identify potential people, process, data, and technology impacts before they become urgent.

A practical readiness assessment could include:
 

• Understand the major legislative changes and affected employee populations.
• Review employee working arrangements and work patterns.
• Assess the quality of existing leave and workforce data.
• Understand how standard, additional, and casual hours may apply across the workforce.
• Map how HR, rostering, time, leave, and payroll data currently flow.
• Identify manual calculations, spreadsheets, and system workarounds.
• Review leave and public holiday policies.
• Assess payroll and workforce management system requirements.
• Plan for the transition of existing leave balances.
• Allow sufficient time for configuration and payroll testing.
• Prepare employee and manager communications and training.
• Continue monitoring guidance from Employment New Zealand and MBIE.

Rather than treating the Employment Leave Act solely as a payroll update, organisations may benefit from approaching readiness as a cross-functional effort involving payroll, HR, workforce management, legal or compliance, technology, and change management.

12. How can Dayforce help organisations prepare for the Employment Leave Act?

Preparing for the Employment Leave Act could require changes across payroll, leave, time, workforce management, and employee data. Having these areas connected can make it easier to understand what needs to change and prepare for the transition.

Dayforce brings HR, payroll, time, and workforce management together on a single HCM platform. This can give teams a more consistent view of employee information, working patterns, leave, and payroll data while helping reduce the need to move information manually between separate systems.

As organisations assess their readiness, this connected approach can help them understand how employees are working, identify the data that may be needed under the new framework, and adapt payroll and workforce processes as requirements evolve.

Dayforce monitors for key legal changes that may impact its products and services, helping inform relevant product updates.

Technology alone doesn’t replace an employer’s responsibility to understand and meet its legal obligations. But having connected systems, processes, and data can make it easier to prepare for change.

With the Employment Leave Act taking effect in August 2028, now is an opportunity to assess whether your people, processes, workforce data, and technology are ready for the transition.