Changes are being made to employment law, specifically around how leave is accrued and administered. The new rules do not come into effect until August 2028, but understanding them now in preparation for the shift later will make your life a lot easier.
Employers, no matter how many people they have on their staff, carry obligations under the law. Health and safety obligations and HR obligations are chief amongst these: as a business owner, you are required to do all you can to keep your people safe and to pay them for their work fairly and as agreed.
Doing your due diligence means ensuring that you understand the law and are compliant with it. Of course, business owners can’t know everything. That’s why there are resources like the Released team! We’ve put together a basic overview so you can know what to expect - and our payroll experts can offer clients more in-depth guidance as it becomes necessary.
What’s on the horizon
The new Employment Leave Act 2026 replaces the Holidays Act 2003, and will affect all types of leave. Here are the highlights:
Leave will accrue right from the beginning of employment, with the current stand-down period removed for all kinds of leave including sick leave, bereavement leave, and family violence leave.
Leave will accrue in hours for all workers, not days. It will also be taken in hours. This will make it easier to take partial days. The rates are: 0.0769 hours per standard hour worked for annual leave, and 0.0385 hours per standard hour worked (capped at 160 hours) for sick leave.
Casual and additional hours will not accrue leave - rather, they will attract a Leave Compensation Payment of 12.5% of ordinary hourly rate.
Be prepared for change
Whoever does your payroll should be ahead of the changes that are on their way! It’s important to remain compliant to the current Holidays Act until the change takes place in 2028, and understand exactly what will change when the time comes. In the lead-up, you can:
Review policies to identify whether anything will change.
Review employment contracts, and ensure that "standard hours” are clear for all employees.
Ensure that all your team members know about the changes and are aware of any way they might be affected.
Need help?
The Released team can set up, streamline, and manage efficient payrolls systems for Kiwi trades and service businesses. Our tradie clients didn’t start their business to become experts in applying and administering employment law - they outsource that to us, while they exercise their hard-earned expertise on the tools and leading their team.
