Further to our article in September 2025, the much-anticipated Employment Leave Bill (the Bill) has now been published.
The Bill broadly aligns with the Government's announcement last year regarding the overhaul of the Holidays Act 2003 (the Holidays Act). If enacted, the Holidays Act would be repealed and replaced in its entirety by new legislation to be known as the Employment Leave Act 2026.
The issues with the current Holidays Act are well-documented. Many of its provisions are unclear, overly complex, and difficult to apply, particularly for diverse working arrangements. As a result, there is a significant administrative burden and compliance costs are high, non-compliance is widespread, and employees do not always receive their full entitlements.
The stated purpose of the Bill is to establish a new framework for leave that is "simple and clear" and that provides employees and employers with certainty about their entitlements and obligations. In its current form, our view is that the Bill would largely achieve this purpose.
Key changes at a glance
Of course, 'the devil will be in the detail'. The following table sets out the current position under the Holidays Act and key proposed changes under the Bill:
Commencement and transition
The majority of the Bill would come into force two years after it receives Royal assent (other than for the State schooling sector which would have up to 10 years before it applied). This lead-in period is intended to provide sufficient time for employers, payroll providers, and other stakeholders to update systems, processes, and employment agreements.
The Bill includes important transitional provisions. Existing employment agreements entered into before the commencement date would have to comply with the (potential) new Act's requirements from the commencement date, and certain provisions of those agreements would need to be brought into full compliance with the (potential) new Act within one year of commencement of the Act.
What employers should do now
Although the Bill is still subject to the usual Parliamentary processes including being considered by a select committee, the Government has indicated that it wants the legislation to be enacted in this Parliamentary term. Employers should therefore not delay in preparing for this significant reform. Refer to our article in September 2025 regarding what practical steps employers should consider taking now to prepare for this change.
Conclusion
The Employment Leave Bill represents the most significant proposed reform to New Zealand's leave entitlements framework in over two decades.
While the two-year implementation period will provide employers with some breathing room, the scale of the changes, particularly the shift to hours-based accrual and the introduction of entirely new concepts such as the leave compensation payment, means that preparation should begin well in advance. Employers who act early will be best placed to achieve a smooth transition and avoid the compliance difficulties that have plagued the current regime.
We will continue to monitor the progress of the Bill through the Parliamentary process and will provide further updates throughout this process.
If you have any questions about the reforms, or any of the matters raised in this article, please get in touch with the contacts listed or your usual Bell Gully adviser.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
