Employment Leave Bill: submissions now open but get in quick!

Public submissions on the Employment Leave Bill are now open and close at 11.59pm on Tuesday, 14 April 2026.^[1] With the Easter public holidays falling within this period, this is a relatively tight timeframe for submissions, indicating to us that the Government is motivated to enact the Bill ahead of the election.

This Bill represents the biggest change to New Zealand’s leave framework since 1981. We generally see the changes proposed in the Bill as positive for New Zealand businesses. However, as with any new legislation, there will inevitably be some nuances as it is applied to specific businesses. Therefore, we encourage any employers with complex payroll systems to consider how the proposed framework would apply to their business and to make submissions where any particular concerns arise.

To assist, we set out below a comparison of the current leave framework and the key changes proposed under the Bill:

Snapshot: current leave framework vs proposed Employment Leave Bill

Area	Current system (Holidays Act)	Proposed system (Employment Leave Bill)
Overall framework	Leave entitlements are days or weeks based, with eligibility linked to periods of continuous employment.	A single, hours based framework, intended to be simpler and more consistent across different working patterns. Leave accrues from day one.
Types of working hours	No formal statutory distinction between different types of hours worked.	Introduces defined categories of working hours, which underpin how leave accrues and is paid. They are: Standard hours (the hours an employee is required to work under their employment agreement and must be paid for, whether or not the employer actually requires the work to be done) Additional hours (paid hours worked on top of standard hours, where the employee is entitled to an additional payment - this does not include unpaid extra hours worked by salaried employees where those hours are already compensated through salary) Casual hours (hours worked where the employer is not required to offer work and the employee is not required to accept it)
Annual holidays - entitlement	Four weeks’ annual leave provided as a lump sum after each 12 months of continuous employment (unless 8% pay as you go loading applies in casual or fixed term employment situations).	Annual holidays accrue in hours from the first day of employment at a minimum rate of 0.0769 hours per standard hour worked.
Annual holidays - changing hours	Accrued holiday balances will change where an employee’s work pattern changes (eg the value of 4 weeks’ accrued leave will be halved if a 40-hour per week employee reduces to 20-hours per week).	Leave hours are banked and are not adjusted if an employee’s standard hours later change.
Annual holidays - taking leave	Taken in weeks, based on the employee’s work pattern at the time leave is taken.	Taken in hours, deducted against the employee’s standard hours (being the hours the employee is contracted to work and be paid for). Where an employment agreement does not clearly specify when standard hours are worked, a notional roster (an agreed or determined pattern of hours based on actual work patterns) is used to determine how leave may be taken.
Annual holidays - cash up	Employees may request to cash up one week of annual holidays per 12 month period.	In each 12 month period, employees may request to cash up, up to 25% of their total annual leave balance as at their anniversary date.
Sick leave - entitlement	10 days’ sick leave after six months’ employment, capped at 20 days	Sick leave accrues in hours from day one of employment at 0.0385 hours per standard hour worked, capped at 160 hours
Sick leave - taking leave	Taken as full days on an “otherwise working day”.	Taken in hours, against standard hours and any rostered additional hours at the time of notification.
Bereavement & family violence leave	Available after six months’ employment and taken as full days	Remain days based entitlements, but apply from day one, with the ability to take part-days.
Public holidays - otherwise working day	Determined by assessing a range of factors, which can be complex where hours vary	New statutory test for employees without agreed working days or patterns: a day is an OWD if 50% or more of that weekday has been worked in the preceding 13 weeks.
Alternative holidays / alternative leave	A full alternative holiday day provided where a public holiday is worked on an otherwise working day.	Alternative leave accrues on an hour-for-hour basis when a public holiday is worked, and may be taken or cashed up in hours.
Additional and casual hours	No concept of “additional” hours. Casual employees (and, if agreed, fixed term employees on agreements for less than 12 months) are paid annual holidays on a pay-as-you-go basis by applying an 8% loading. These employees can still be eligible for sick and bereavement leave if they meet the applicable continuous employment test.	A leave compensation payment (LCP) of 12.5% is paid on a pay-as-you-go basis for additional and casual hours instead of accruing annual or sick leave on those hours. It does not apply to bereavement or family violence leave, which remain separate statutory entitlements.
Remediation	No statutory remediation framework.	Introduces a statutory remediation framework enabling employers to resolve historic Holidays Act non compliance through a prescribed process involving the payment of reasonable compensation and the ability to set a minimum payment threshold, below which no payment is required.
Transfer of employees’ leave entitlements/liability in a sale of business situation	Employees’ leave entitlements do not transfer to a new employer as part of a restructuring process. Therefore, the legal requirement is that all leave entitlements must be paid out by the previous employer (in practice, this often will not occur as it is in the best interests of all parties for the leave to transfer to the new employer).	Employment is treated as continuous when an employee elects to transfer to a new employer as part of a restructuring process and, where agreed, all accrued leave transfers to the new employer.
Transition Timeframe	The Holidays Act 2003 applies	The new Act will generally come into force two years after Royal assent. Existing employment agreements that refer to the Holidays Act may continue to be applied for a further transitional period (up to one year) after the new Act is in force, before needing to be updated to reflect the new framework.

Next steps

Our team will be preparing our own submissions on the Bill, so please feel free to provide any feedback to our team members to consider when drafting those submissions.

Alternatively, if you would like any assistance in drafting your own submissions on behalf of your business, please get in touch.

^[1] Simpson Grierson - The Employment Leave Bill is here: fundamental overhaul of New Zealand’s leave framework proposed