Employment Leave Act 2026: what employers and employees need to know

3rd September 2026

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Calculating leave entitlements in New Zealand has never been a simple task, leading to confusion and issues for both employers and employees. After years of scrutiny and calls for change, the Holidays Act 2003 is finally being replaced with a new system designed to make leave entitlements easier to understand and administer.

The long-awaited replacement for the Holidays Act has now become law. The Employment Leave Act 2026 is set to change how annual leave, sick leave, bereavement leave, family violence leave, public holidays and alternative holidays are calculated, earned and paid.

But there is an important point for employers and employees: the new law does not take effect immediately.

When will the Employment Leave Act come into force?

The Employment Leave Act will come into force on 6 August 2028, replacing the Holidays Act 2003. Until then, employers must continue to follow the current Holidays Act rules. Even if they are ready to switch to the new system early, they can’t.

The two-year transition period is designed to give employers, employees and payroll providers time to understand the changes and prepare their systems and processes.

What will change?

One of the biggest changes is that leave will move towards a system based on hours, rather than the current Holidays Act approach, which can be particularly complicated for people with variable working patterns.

The new Act changes the way annual leave and sick leave are earned and calculated, including rules around standard, additional and casual hours. It also introduces new approaches to leave payments and the way leave balances are recorded.

There are changes to the rules covering:

Annual leave
Sick leave
Bereavement leave
Family violence leave
Public holidays
Alternative holidays
Leave payments and record-keeping.

The new legislation is designed to make the system easier to understand and administer, while still establishing minimum legal entitlements. Employers and employees can continue to agree to leave and pay arrangements that are more generous than the statutory minimums.

What does this mean for employers?

There is nothing that employers need to change immediately - however, the Ministry of Business, Innovation and Employment (MBIE) recommends using the two-year transition period to prepare.

Employers should eventually review their payroll systems, employment agreements, workplace policies and leave-recording processes. They should also make sure their existing Holidays Act calculations and leave records are accurate before transitioning to the new system.

This could be particularly important for businesses with employees working variable hours, complex rosters or multiple roles.

Employers should also be aware that employment agreements will need to reflect the new law. MBIE advises that agreements should ideally be updated by 6 August 2028, although there is a transition period allowing up to an additional year in some circumstances.

What does it mean for employees?

For employees, the key message is don't assume your current leave entitlements will change immediately. The Holidays Act continues to apply until 6 August 2028.

The new system may make leave calculations more straightforward, particularly for people whose working hours vary. However, the exact impact will depend on individual working arrangements and the terms of their employment agreement.

If you are an employee, you don't need to take action now, but it will be worth you being aware that these changes are happening and understanding how your employer plans to transition to the new system. It’ll also pay to check that their leave records are accurate.

The good news for Martin Personnel clients and associates…

If you are a client of ours who has hired employees through Martin Personnel on a temporary basis, you can relax knowing that we will have all of this covered for you when the new Act comes into force because we administer payroll on your behalf.

Similarly, if you are one of our associates doing temporary work through us, we’ll take care of your leave entitlements on your behalf.

This is one way Martin Personnel takes the weight off your shoulders and we will also make sure all the updated documentation is in place so that every aspect of placing people into roles with you is compliant.

If you are employing staff directly, make sure you find out what changes you need to put in place in your workplace. It goes beyond payroll; the changes also impact legal agreements and employee communication. Below we’ve pointed you in the right direction for finding out the information you need to know…

Where can you find out more?

The best source of information is Employment New Zealand, which is part of MBIE. Its dedicated Employment Leave Act 2026 section will be updated as more detailed guidance becomes available.

Employers can also read the guidance on preparing their payroll systems, employment agreements and workplace policies for the changes.

For the legislation itself, the official New Zealand Legislation website (link below) provides the full text of the Employment Leave Act 2026.

With two years to prepare, there is no need to panic, however employers should avoid leaving the transition until the last minute. Understanding what is changing now will make it much easier to identify what needs to be updated before August 2028.

Official information:

This article provides general information only and is not legal advice – please check the official government websites for the most up to date and accurate information.