Big changes to employment leave are coming. On 6 August 2028, the new Employment Leave Act will replace the Holidays Act 2003 and change how leave is earned, taken and paid. It may feel like a long way off, but the work involved in updating payroll systems, agreements and policies can add up quickly. Here is a plain-English summary of what Employment New Zealand says employers can start thinking about now.
First, the Law Has Not Changed Yet
Until 6 August 2028, you must keep following the current rules in the Holidays Act. You can’t adopt the new law early, even if your systems and paperwork are ready. What you can do is use the next two years to understand the changes and plan how your business will adapt.
The good news is that you don’t have to take action right now. But thinking ahead will help you gauge how much work is involved and give you time to:
- understand the new requirements
- check whether your payroll system, and any related systems, need changes
- review your employment agreements
- review your workplace policies
- make sure your payroll data is accurate so leave balances can be converted correctly
Employment New Zealand has also said that more guidance is on the way, including help with updating agreements, policies, pay statements and leave records, and with converting leave balances. It has published a timeline of what will be released and when, so it’s worth checking back regularly.
1. Your Payroll System
Payroll systems will need updating to support the new rules on how leave is earned, taken and paid. These updates can be complex and take time, so what you need to do depends on how you run payroll.
If you use payroll software with a current provider, they should already know about the changes. Ask them whether you’ll need to change any processes or provide extra data.
If you use off-the-shelf software, check with the vendor about upgrades or support, and plan for any manual calculations you may need to do. If your software can’t support the changes, you may need to consider switching providers.
It’s also worth looking at the systems connected to payroll, such as time and attendance, pay information, onboarding and rostering, records and leave tracking, arrangements for employees with multiple roles, and restructuring and employee-transfer processes.
2. Your Employment Agreements
Review your agreements to see what might need to change. Depending on what they say, you may need to:
- accurately reflect employees’ hours of work
- align with the new leave entitlements and leave pay rules
- meet the new requirements for what happens to leave balances in a restructure
- refer to the Employment Leave Act 2026 instead of the Holidays Act 2003
You must not change an employment agreement without discussing and agreeing the change with the employee first, and you should keep records of what was agreed. If you have collective agreements, plan how they will be bargained and agreed.
Starting early is especially smart if you have collective agreements coming up for renegotiation, a large number of employees, or employees with complex working arrangements. More detailed agreements may need more negotiation.
Timing: 2028 vs 2029
You should aim to have agreements updated by 6 August 2028. If you update them before then, make sure they clearly state that current leave entitlements apply until 6 August 2028, and that new entitlements under the Employment Leave Act apply from that date.
If you need more time, you have until 6 August 2029 to update your agreements. But there’s a catch. During that extra year you will have to follow both the agreement and the new law, and where they differ, you must apply whichever is better for the employee. That makes payroll harder to manage. After August 2029, if an agreement doesn’t match the new law, employees get the new legal minimum entitlements, even if their existing agreement offered better terms.
3. Your Workplace Policies
Policies will also need a review. Depending on what yours say, you may need to update those covering:
- leave and holidays
- pay and allowances
- record-keeping and pay statements
- annual closedowns and agreed closures
- family violence support
4. Get Your Payroll Data Right Now
This is the step you can act on today. Make sure you’re meeting your obligations under the current Holidays Act by checking leave balances and leave pay calculations, fixing any errors, and paying any money owed to employees. If your data is wrong, those errors will carry over into the new system and be harder to fix later. Starting from accurate records means your leave balances will be correct when it’s time to convert them.
A Simple Action Plan
- Keep following the Holidays Act until 6 August 2028.
- Talk to your payroll provider about their plans.
- Audit your payroll data and fix any Holidays Act errors.
- Review your agreements and policies to see what will need to change.
- Plan your consultation with employees, or your collective bargaining, early.
- Watch for new guidance from Employment New Zealand as it is released.
A Note for Employees
The page this post draws on is written for employers, so it doesn’t cover the employee side in detail. In short, employees should expect their employer to consult them on any changes to their employment agreement, and can keep an eye on Employment New Zealand’s website for employee-focused guidance as it is released.
The Bottom Line
You have two years to prepare, and starting early means less stress and fewer surprises. The key is to understand what is changing, talk to your payroll provider, get your data in order, and plan how you’ll update agreements and policies in consultation with your people.
Source: Employment New Zealand, “How employers can get ready for the changes coming in 2028” (employment.govt.nz). For more information visit https://www.employment.govt.nz/leave-and-holidays/changes-to-leave-coming-in-2028
This post is general information only and is not legal advice. For guidance specific to your business, check Employment New Zealand’s website or seek professional advice.
