Holidays Act headache finally over as leave reform delivered

The Employment Leave Bill has passed its third and final reading, ushering in a long-awaited overhaul of the law that provides employees with employment leave entitlements, like annual and sick leave, Workplace Relations and Safety Minister Brooke van Velden announced today. 

“This Bill delivers on the Government’s priority to replace the broken Holidays Act with a leave system which is simple and straightforward, so that employers have confidence in their calculations, and employees have confidence they are being paid correctly – a benefit to workers and businesses alike,” says Ms van Velden. 

“Kiwis have been asking Governments to do something about this legislation for years, and in particular they have been asking for an hours-based accrual system. Successive governments have put it on the to-do list, but nothing came to fruition. This Government has listened, and I am proud that this reform has finally been delivered.”  

Key aspects of the Bill include: 

Annual and sick leave accrued in hours, in direct proportion to standard hours of work 
Annual, sick, bereavement and family violence leave available from the first day of work 
Use of a single hourly rate for paying leave, across all types of leave 
A new 12.5% Leave Compensation Payment for additional and casual hours, instead of accruing annual leave and sick leave for those hours 
Mandatory pay statements that itemise pay and leave in a way that’s transparent and easy to understand 
Greater flexibility to cash up annual leave, with workers able to cash up 25% of their total annual leave balance each year 
A new Otherwise Working Day test for those who work additional days or do not have a specified pattern of work  
Removal of annual leave payment penalty for those returning from parental leave.  

“Achieving this milestone for workplaces is thanks to the hard work and generous time of those who have shared the vision of a better leave system, and have contributed their expertise and experience to the policy process. 

“We’ve already had decades of overcomplicated legislation so now that we’ve finally settled on a simpler path forward, I hope it will be enduring to give businesses and workers the simplicity and stability they need.  

The changes to the new leave system will have a 24-month lead-in to allow time for a careful and managed transition by businesses and payroll providers, and there will be an additional year after the Act comes into force to update leave terms in employment agreements.  

MBIE will provide comprehensive guidance to support implementation on its Employment New Zealand website. Initial guidance and a timeline for further guidance and resources will be available once the Bill receives Royal assent. ...