On 13 July 2026, the Education and Workforce Select Committee (Committee) reported back on the Employment Leave Bill (Bill), recommending by a majority that it be passed.

The Committee has not sought to fundamentally restructure the Bill. Its amendments focus on workability and targeted refinements. Notable changes include: 

• tightening notional roster requirements to better reflect employees' actual working patterns
• closing a gap in the "otherwise working day" (OWD) test that would have reduced public holiday entitlements for some employees
• strengthening employer obligations under the remediation framework for historic Holidays Act 2003 (Act) liabilities.

To recap, the Bill proposes to repeal and replace the Act with a new Employment Leave Act. Key components of the Bill (which are unchanged by the Report) include:

• an hours-based accrual framework
• three categories of working hours (standard, additional, and casual hours)
• a single hourly leave payment rate
• a leave compensation payment (LCP) of 12.5% to be paid for all additional and casual hours (as opposed to accruing leave on those hours)
• an optional remediation framework for Act liabilities.

Key differences between the original Bill and the Report's recommendations

	The Bill as introduced	The Bill as per the Report
Notional rosters	Notional rosters required where an employment agreement does not specify all details of when standard hours are worked, and must be kept up to date.	Notional roster must specify: the number of the employee’s standard hours, days of the week on which they have standard hours, and the hours in each day that are the employee’s standard hours; or include a methodology for determining the days of the week on which the employee has standard hours and the hours in each day that are the employee’s standard hours. The ability to set a methodology for determining the “notional roster” addresses concerns we raised in our submissions about the difficulties that some employers may have otherwise faced in having to ensure notional rosters were agreed and kept up to date on an ongoing basis.
Multiple roles with same employer	Leave entitlements applied separately to each role, with separate leave balances.	Parties may agree in writing on how multiple roles are treated for leave purposes, allowing for agreement on what arrangements best suit their situation. Separate treatment is retained as the backstop.
Annual leave: purpose and taking leave	Annual leave described as giving employees an opportunity to take paid time away from work. We had raised concerns in our submissions about the removal of the purpose of “rest and recreation” for taking annual leave.	Aligned with our submissions, "rest and recreation" has been reinstated as part of the purpose of annual leave.
OWD test	The ‘Otherwise Working Day’ (OWD) test to determine if an employee would have worked on a day to entitle them to public holidays (50% of corresponding days in the preceding 13 weeks) only applied where no working days were specified in the employment agreement.	Wording amended so the test also applies where some days are specified in the employment agreement, but the employee regularly works additional days. This closes a gap that would have potentially reduced public holiday entitlements for some employees.
OWD notification requirement	Employers required to notify employees whether a public holiday is being treated as an OWD, regardless of how that was determined.	Notification not required if a day is treated as an OWD in accordance with the days or pattern of days specified in an employment agreement.
Incorrectly accrued leave (LCP shortfall)	Where leave was incorrectly accrued instead of the LCP being paid, employees could use or cash up purported annual leave but the employer would not be liable to provide the employee with LCP retrospectively. Submissions highlighted that this approach would not lead to the same outcome for the employee as if the LCP had been correctly applied in the first place.	To address the inequity identified in submissions, wording has been amended to provide that where an employee cashes up incorrectly accrued annual leave, they are also entitled to an additional payment of 0.92% of the leave payment rate for each hour for which annual leave was incorrectly accrued. This additional payment accounts for the remaining component of the 12.5% LCP rate after deducting annual leave (7.69%) and sick leave (3.89%) portions.
Remediation framework: notification of past employees	Employers opting into the remediation process outlined in the Bill were required to make reasonable efforts to notify past employees, with no specified deadline or mandatory public publication.	Employers must now publish notices in at least two specified media and “use all reasonable efforts” to contact past employees within six months from the date that the employer opts into the remediation process. If they fail to do so, the suspension on claims under the Act for a given past employee (which would otherwise apply when an employer has opted into the remediation process) would be lifted.
Remediation framework: minimum payment by regulation	Regulations made by Order in Council could set a minimum payment threshold below which no payment was required under the remediation process. Some submissions raised concerns about transparency and fairness due to the minimum payment being set by regulations.	This regulation-making power has been removed. The Committee has stated that “the advice of our departmental advisers [is] that it is no longer necessary to set a minimum amount payable, given the likely nature of the remediation calculations”.

For further information on the Bill as it was introduced, please see our previous article The Employment Leave Bill is here: fundamental overhaul of New Zealand's leave framework proposed.

Opposing views

The Report records that Labour does not support the Bill, based on its view that it: 

• leaves thousands of workers worse off by tying leave accrual to standard hours only;
• entrenches unequal leave outcomes for workers in non-standard arrangements; and
• treats leave as a cost to be managed rather than a health and wellbeing entitlement.

The Greens similarly oppose the Bill, submitting that it will disproportionately affect part-time workers, those with variable or casual hours, and women, young people, Māori, Pasifika and migrant workers. The Greens also raised concerns that workers' representatives were excluded from the policy development process.

What's next and what do we think?

The Committee of the whole House will now consider, debate and vote on the Report. We expect the legislation to be passed by 1 October 2026, being the official end of the parliamentary term before this year’s election. There will then be a two-year transition period before the provisions take effect.

Overall, the amendments appear sensible and workability-focused. We are pleased to see that several of our submissions were accepted by the Committee. However, we do consider there is further opportunity before the legislation is passed to make the framework more flexible to address the needs of different workplaces. For example, we had submitted that employers should have the option of simply accruing leave on all hours worked (as opposed to accruing leave only on standard hours, with LCP paid for any additional hours). In our view, this would be a sensible amendment that would not disadvantage employees.

Employers should continue preparing for the reforms, including reviewing employment agreements, planning for collective bargaining, assessing payroll capability and considering whether outstanding Holidays Act liabilities will warrant engaging with the remediation process.

There will be significant work involved for employers in transitioning to a new leave regime. Considering that, many of our clients are particularly concerned about whether this reform will last. The Labour Party has commented that: “We believe this is not a bill that will stand the test of time”. Therefore, although the Labour Party has not announced any policy on the Bill at this stage, it appears inevitable that it would be looking to make some changes if elected to Government. The key question will be whether those changes tweak aspects of the Bill, or take things back to the drawing board. Given the simplicity posed by the Bill, we hope for the former. 

Get in touch

Please feel free to reach out to any of our experts if you have any questions about how your organisation will be affected by the Bill and the Report's proposed changes.