Holidays Act to be replaced

Progressing reforms to the Holidays Act to simplify the law, give businesses certainty and reduce compliance costs is an action under the Government's Going for Growth plan: 

Competitive Business Settings

New Zealand’s current leave system is complex and confusing. Employers struggle to understand and apply the Holidays Act correctly, and workers struggle to understand their entitlements.  

The proposals reform the systems for earning and taking annual and sick leave.

Key changes:

• rather than lump sum entitlements provided in weeks and days, both will accrue in hours, starting from day one
• there will be financial compensation in lieu of annual leave and sick leave for casual employees and employees who work more than contracted hours
• one single streamlined and simplified leave payment method will apply for all types of leave.

There are further changes proposed to the leave system such as:

• a shift to hours-based accrual for alternative holidays
• a new Otherwise Working Day test for public holidays
• the ability to take part-days of all types of leave.  

There will be a 24-month implementation period after the Employment Leave Bill is passed into law, to allow for a smooth transition for employers and payroll providers. 

Full details of the proposed changes, including the Cabinet paper and a factsheet:

Holidays Act reform