Holidays Act reform – What employers should do to prepare for the new Employment Leave Act 2026

On 6 August 2026 the Employment Leave Act, New Zealand’s long awaited replacement for the Holidays Act 2023, became law. [1]  

Although the Employment Leave Act (the Act) has been enacted, most provisions will not come into force until 2028. The delay is to enable employers time to prepare for the significant change to payroll, systems and employment agreements that will be required by the new law.  

The intention of the law change is to simplify the way in which leave is calculated, ultimately creating clarity, improved compliance and a framework more fit for modern working arrangements. 

This article addresses key steps employers should start taking in anticipation of the law change. See our earlier article [2] for a summary of how the law will change.  

What employers should do to prepare for the Holidays Act change to the new Employment Leave Act: 

• Comply with the Holidays Act. The Holidays Act remains in force until the new regime takes effect in 2028. Employers are bound by existing obligations. Existing liabilities do not disappear because the law is changing. 
• Manage leave liability. This strengthens the financial position of an organisation (given leave is recorded on the balance sheet), reduces the risk of paying leave at a higher rate in the future, and is consistent with employee wellbeing. Employees regularly taking leave are often less fatigued, more productive and more engaged. 
• Review all working arrangements, and how these may be affected by the change to an hours-based leave model. Use payroll data to ensure accuracy. This includes:  
• Terms of employment (employment agreements). Do the terms define standard hours with sufficient precision? 
• How employee hours work in reality;  
• Identify employees who work additional hours on a regular basis; 
• Review casual employees (and whether they remain truly casual); 
• Review employees on fixed term arrangements, secondments, and covering multiple positions. 
• Consider whether current payroll systems can accommodate the law changes, i.e. are they are capable of supporting hours-based accrual and correctly processing leave compensation payments.  
• Review employment agreements, policies and the way in which records are kept. Consider what updates may be needed to enable future compliance. 

This is a significant change to the way in which employee leave is managed in New Zealand. Our team of specialist employment lawyers can help you with the transition. You can contact the team on [email protected] or 07 282 017.