Government unveils two-year transition period to give employers and payroll providers enough time to prepare
New Zealand's newly passed reforms on its leave system will take effect on 6 August 2028, the government announced, with detailed guidance to be provided in the coming months.
In an update on Friday, the government said the newly passed Employment Leave Act does not start until 6 August 2028 and told employers to continue following the Holidays Act.
"The law has not changed yet. You must follow the current rules in the Holidays Act until the new law starts on 6 August 2028," Employment NZ's website read.
"You cannot start following the new law early, even if you are ready."
The two-year transition period aims to give employers enough time to get ready for the changes, according to the government. This includes planning ahead, updating and testing systems, agreements, and policies, as well as engaging with employees.
"Some organisations may need to start preparing earlier than others, depending on the changes needed to their systems and processes," Employment NZ said.
"We'll provide detailed guidance in the coming months to help payroll providers, employers, and employees prepare for the changes."
Changes under Employment Leave Act 2026
The Employment Leave Act 2026, which was passed this week, introduces major reforms to how leave is earned, taken, and paid. The leave entitlements affected include annual leave, sick leave, family violence leave, bereavement leave, public holidays, and alternative leave.
Some of the major reforms under the legislation include how annual and sick leave will be accrued from day one in hours, against standard hours, rather than provided as annual entitlements.
There is also a new 12.5% upfront leave compensation payment in lieu of annual and sick leave accrual for all additional and casual hours.
Public holiday entitlements will also shift to a new Otherwise Working Day test, while alternative holidays will transition to hours-based accrual.
According to the law, employees will be able to use one hour of accrued leave for every hour they take off work. They will also be able to take part days off work.
In terms of how leave is paid, the same hourly leave pay rate will be used for all types of leave, and fixed allowances will continue to be paid in full during leave. For annual leave taken after parental leave, the government said it will be paid like any other annual leave.
"The new rules will be the minimum leave entitlements that employers must provide by law. Employers and employees can agree to better leave and pay than these minimum entitlements," Employment NZ's website read.
