Employment Leave Act 2026: What Employers Need to Know
The Government passed the Employment Leave Act 2026 on August 6, 2026, which repeals and replaces the Holidays Act 2003. The new legislation introduces an hours-based accrual framework, day-one leave entitlements, and a single hourly pay rate for all types of leave.
Implementation Timeline
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August 6, 2026: The Employment Leave Act received Royal Assent.
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July 1, 2027: Parental leave payment adjustments and annual leave accrual updates during parental leave come into force.
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August 6, 2028: The main framework comes into force for most sectors, replacing the Holidays Act 2003.
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August 6, 2036: The primary and secondary education sector transitions to the new act.
Please note that Employers must still follow the existing Holidays Act 2003 until the new law officially applies in 2028.
Key Changes in the New Legislation
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Accrual from Day One: Annual and sick leave accrue in hours from the first day of employment rather than waiting for 6 or 12-month milestones.
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Accrual Rates: Annual leave accrues at 0.0769 hours per standard hour worked; sick leave accrues at 0.0385 hours per standard hour worked (capped at 160 hours).
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Leave Compensation Payment: A 12.5% payment on casual and additional hours replaces leave accrual for those extra timeframes.
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Taking Leave: Leave is taken and recorded in exact hours, allowing for partial-day leave.
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Simplified Pay: A single, consistent hourly leave rate applies across all leave types.
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Cashing-Up: Employees can request to cash up to 25% of their total annual leave balance each year.
For official guidance and ongoing updates, check Employment New Zealand or the Ministry of Business, Innovation and Employment.
