The new Employment Leave Act 2026

The Employment Leave Act 2026 officially passed into law on 6 August 2026, replacing the long-standing Holidays Act – with the new legislation taking effect from 6 August 2028.

This is the most significant change to employee leave and holiday entitlements in more than 20 years, fundamentally changing how leave is earned, taken and paid.

Importantly, the new rules are not in effect yet. Employers must continue to follow the current Holidays Act requirements until the new legislation comes into force on 6 August 2028.

While you don’t need to take any action right now, it’s important to understand how the changes may impact your team, policies and employment documentation.

Hello Monday can provide tailored advice to help you prepare for the changes under the new Employment Leave Act, giving you a clear plan and plenty of time to make the transition as seamless as possible.

What will change in August 2028?

Some of the biggest changes in the Employment Leave legislation will impact how leave is earned, taken and paid, including:

• annual leave
• sick leave
• family violence leave
• bereavement leave
• public holidays, and
• alternative holidays.

1. How leave is earned
   Annual and sick leave will move to an hours-based system, with leave accruing from day one against an employee’s standard hours. There will also be a 12.5% leave compensation payment for additional and casual hours instead of annual and sick leave accruing on those hours.

Public holiday entitlements will be based on a new, clearer ‘Otherwise Working Day’ test, and alternative holidays will also move to an hours-based system.

 

2. How leave is taken
   Leave will be taken in hours. An employee will use one hour of their accrued leave for each hour they would otherwise have worked, making it easier to take leave for part of a working day.
3. How leave is paid
   The proposed system will use a consistent hourly rate for leave payments. For employees paid wages, this will generally be based on the lowest hourly rate that applies to the relevant day or shift. Fixed allowances that are required under an employment agreement will continue to be paid during leave.

The new system will also change how annual leave is paid following parental leave, with annual leave taken after parental leave being paid using the new standard leave payment method.

What can you do in the meantime?

While there’s no need to make changes for the new legislation just yet, there are a few things you can do now to make the transition easier:

1. Check your employment agreements
   Make sure everyone on your team has a current written (and signed) employment agreement, and that you have a copy on file. It’s also a good opportunity to check that the agreements accurately reflect your business and the terms and conditions that your people are currently working to.
2. Review your key employment documents
   Take a look at your employment agreements, policies and procedures and identify anything that may need updating. This gives you time to address any gaps before the new leave rules come into effect.
3. Get your records in order
   Make sure your payroll, leave and employee records are accurate and up to date. Good record-keeping now will make it much easier to manage the changes when the new legislation takes effect.

 

A little preparation now can save a lot of work later. Hello Monday can help audit your current employment documentation, identify what needs attention, assess the work involved and give you a clear pathway to being ready well ahead of the transition.

Reach out to the team at hello@hellomonday.co.nz or give us a call on 09 377 5200.

For help to review your employment templates, processes and practices and ensure you are up to date and compliant under the new legislation. Reach out at hello@hellomonday.co.nz or give us a call on 09 377 5200.