Annual and sick leave now accrued in hours in direct proportion to standard work hours
Brooke van Velden has announced the passage of the third and final reading of the Employment Leave Bill, intending to overhaul the Holidays Act 2003, the legislation governing employees’ entitlements to annual leave, sick leave, and other types of employment leave.
“Kiwis have been asking Governments to do something about this legislation for years, and in particular they have been asking for an hours-based accrual system,” van Velden said in the government’s news release.
The government explained that the Employment Leave Bill covers:
Under the new leave system, the government clarified that businesses and payroll providers will have 24 months to shift to the new leave system, as well as another year following the enactment’s entry into force to adjust employment agreement leave terms.
According to van Velden, the bill seeks to help:
The government shared that the Ministry of Business, Innovation, and Employment (MBIE) will offer detailed guidance for implementation on the Employment New Zealand website.
The government added that it will provide initial guidance and a timeline for additional guidance and resources after the legislation receives royal assent.
“Achieving this milestone for workplaces is thanks to the hard work and generous time of those who have shared the vision of a better leave system, and have contributed their expertise and experience to the policy process,” van Velden said in the government’s news release.
Here are some other news stories involving holiday entitlements under employment law.
In a proceeding involving an attempt to recover wage or holiday arrears, the Court of Appeal of New Zealand issued a 27 February 2026 decision agreeing to recall its previous judgment awarding a labour inspector’s costs, to be paid by a person legally aided at the time.
In proceedings focusing on the existence of an employment relationship, the Employment Court of New Zealand made a 27 January 2026 decision refusing to stay the execution of the Employment Relations Authority’s orders for a company to pay amounts including gross public holiday pay and gross holiday pay.
In September 2025, van Velden announced the introduction of the new Employment Leave Act to replace the Holidays Act. In June 2024, the government asked businesses and workers for feedback on Holidays Act amendments.
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