The Government has introduced the Employment Leave Bill, proposing a major overhaul of New Zealand’s leave laws (replacing the Holidays Act 2003) and a shift to a largely hours-based approach to accruing and paying leave.

For direct sellers, where working patterns can be variable, seasonal, and incentive-based, the proposals could have practical impacts on how you define and record “standard” hours, treat casual engagement, and ensure payroll correctly captures commission and other pay components for leave. While the law has not changed yet, now is a good time to take stock of agreements, time recording and payroll settings.

Key proposed changes

• Leave accrues in hours from day 1 (rather than annual leave crystallising after 12 months), recorded and taken in hours
• New statutory categories of hours that underpin accrual and payments: standard hours, additional hours, and casual hours (with a new concept of a ‘notional’ roster, which is to be agreed with employees if their standard hours vary)
• Leave compensation payment (LCP) of 12.5% is proposed for additional and casual hours (paid each pay period) in lieu of annual and sick leave accrual on those hours
• One hourly leave pay rate is proposed for all leave types (calculated by reference to the relevant day), replacing multiple current calculations
• Variable remuneration such as bonuses, commission and incentive-based payments will generally be excluded from leave pay calculations
• Public holidays would be determined using a clearer “otherwise working day” test (relevant for variable schedules)
• Alternative leave to be on an hours-based approach.

What you should do now

• Map working patterns: identify roles with fixed standard hours, variable hours, and casual engagement
• Check employment agreements: ensure “standard hours” (and any availability or overtime arrangements) are clearly expressed and workable in practice
• Review payroll capability: confirm your payroll/timekeeping can track hours accurately, distinguish hour categories, and calculate an hourly leave pay rate consistently across leave types
• Stress-test variable pay: review how commission/bonuses/allowances are currently treated for leave calculations and whether changes may be needed under a single hourly methodology
• Contractor health check: for your independent-contractor sales team, consider a targeted review of contractor classification, onboarding and operating practices

You can access our Employment team’s article here for more detailed information on the Bill.

What’s next?

The Holidays Act 2003 remains in force unless and until replacement legislation is enacted and brought into effect. This update is a high-level FYI only. Please get in touch if you would like us to sense-check how the proposed framework would apply to your business model, review agreements, or help prepare a submission on the Bill (closing on 14 April).