Employer Bulletin | 29 September

Cabinet has agreed to policy proposals for new employment leave legislation: a simpler and more workable replacement for the Holidays Act 2003.

Progressing reforms to the Holidays Act to simplify the law, give businesses certainty and reduce compliance costs is an action under the government's Going for Growth plan.

New Zealand’s current leave system is complex and confusing. Employers struggle to understand and apply the Holidays Act correctly, and workers struggle to understand their entitlements. 

The proposals reform the systems for earning and taking annual and sick leave.

Key changes:

• rather than lump sum entitlements provided in weeks and days, both will accrue in hours, starting from day one
• there will be financial compensation in lieu of annual leave and sick leave for casual employees and employees who work more than contracted hours
• one single streamlined and simplified leave payment method will apply for all types of leave.

There are further changes proposed to the leave system such as:

• a shift to hours-based accrual for alternative holidays
• a new Otherwise Working Day test for public holidays
• the ability to take part-days of all types of leave.
• There will be a 24-month implementation period after the Employment Leave Bill is passed into law, to allow for a smooth transition for employers and payroll providers

In today’s Bulletin:

• Failure to consult on selection criteria leads to unjustified dismissal
• Mistake in trial period provision renders it invalid
• Procedural flaws in disciplinary process leads to unjustified dismissal
• Authority issues compliance order for unpaid settlement
• Authority penalises attempt to coerce witness
• Seven news updates of interest for employers including: Holidays Act to be replaced; New residence options to bolster workforce; New Reserve Bank Governor appointed; Developing talent for a stronger economy; GDP decreases 0.9% in the June 2025 quarter; Action needed to address ageing population, and Trade Minister to promote NZ trade at ASEAN Economic Ministers meeting.
• Nine bills open for submission

If you have any questions, about this case or other employment relation matters, call the Advice Line team on 0800 800 362.