The new legislation enhances the leave benefits for casual workers and parents
Workplace Relations and Safety Minister Brooke van Velden has announced the introduction of a new Employment Leave Act to replace the Holidays Act 2003.
According to van Velden, the new legislation is a fix for “a broken system that has been too complicated for businesses and workers to navigate effectively”. Under the Employment Leave Act, both full and part-time workers will accrue annual and sick leaves directly proportionate to the number of hours worked; moreover, sick days can be filed in hours.
Casual employees will be entitled to leave compensation pay in the form of an upfront amount of 12.5% for each hour worked; this replaces the old leave accrual method and the 8% Pay-As-You-Go payment. Those who work extra hours will also receive an upfront payment of 12.5% for each additional hour; annual or sick leaves will not be accrued.
Employees will be entitled to family violence and bereavement leave from their first day with an organisation. Those on parental leave will no longer have to take pay cuts for taking annual leave.
Employees with a high annual leave balance will be able cash up 25% of their total annual leave balance every year. Employers who support the cashing up benefit will be entitled to reduced leave liability.
Every pay period, employers will be mandated to draw up clear pay statements that break down pay and leave transparently.
“Gone are the days of multiple, confusing calculations for leave payments. One single streamlined and simplified leave payment method will apply for all types of leave. For many people, leave entitlements will stay the same – what will change is how it is calculated”, van Velden said. “Employers will finally have certainty with straightforward rules they can understand and apply. This is a win for workers, a win for businesses, and a win for New Zealand”.
The minister explained that the Holidays Act has cost employers billions in large-scale remediation payments as “employers struggle to understand and apply the Holidays Act correctly, and employees struggle to understand their entitlements”.
“In December 2024, I announced a change of direction for Holidays Act reform based on consultation feedback. My ambition then was to pass a new Act by the end of term – and I am pleased to confirm that remains on track”, van Velden said.
She confirmed that once the Employment Leave bill is passed, a 24-month implementation period would be imposed to facilitate a smooth transition for employers and payroll providers.
