New Annual Leave Changes Just Announced in New Zealand
What we do
We can easily adapt to your environment and coach you every step of the way, either on your site, off-site, on the phone or online. You will get a dedicated Consultant to support you with all your people and culture requirements.
Processes & Guidelines
We will tailor your HR processes and policies to perfectly fit your company's unique needs and goals. We conduct a thorough evaluation of your current HR documents, policies & frameworks to identify gaps & improvement areas.
We will then work with you to create bespoke documentation, templates, guides, policies and toolkits that suit your internal culture. We also work with our employment lawyer to ensure your documents comply with current legislation so that your HR department has the fundamentals in place to operate smoothly (without going overboard with paperwork)!
People & Culture Strategy
In the initial phase of our collaboration, we engage with clients through either an employee engagement survey or a client discovery session. This step allows us to gather essential insights into the current HR dynamics and employee perspectives. The outcomes from these discovery phases allows us to craft a bespoke HR strategy that aligns with business goals and prioritise key focus areas.
Our partnership approach ensures the HR strategy we develop addresses both the immediate and long-term needs of the organisation.
Remuneration & benefits
We collaborate with you to refine your remuneration and benefits approach, ensuring they're competitive and reflect your company's mission. By leveraging market insights, we craft strategies that attract and retain talent while maintaining financial viability.
Our role extends to effectively communicating these benefits to your employees, emphasising their value in supporting both professional and personal growth. This approach boosts employee satisfaction and positions your company as a preferred employer.
Talent management and planning
We help you align your talent strategy with your business goals, identifying skill needs and talent gaps to ensure your workforce is future-ready. Our services include succession planning and talent development, aimed at creating a flexible and growth-oriented organisation.
Our proactive talent management approach focuses on nurturing high-potential employees and fostering a culture of continuous improvement. This keeps your team competitive and engaged, preparing your company for both current and future success with enhanced employee retention.
Organisational design
We partner with our clients to identify key talent needs and develop strategies to attract, retain, and develop the right people. Our approach includes performance management, leadership development, and succession planning, all tailored to enhance your team's capabilities and readiness for future challenges.
Our support extends beyond strategy development; we also provide practical tools and guidance for implementing effective talent management practices. This includes creating engaging employee development programs and establishing clear career paths that motivate and retain high performers.
Diversity and Inclusion
We collaborate with you to develop strategies that foster an inclusive workplace, where diversity is not just recognised but celebrated. Through targeted training programs, policy development, and awareness campaigns, we help create an environment that encourages open dialogue, mutual respect, and equal opportunities for all employees.
Our goal is to ensure that every team member feels valued and empowered to contribute their best, driving innovation and enhancing company performance.
Wellbeing initiatives
We assist our clients in crafting and implementing comprehensive wellbeing initiatives that address the physical, mental, and emotional health of their workforce. By conducting thorough needs assessments, we identify specific areas where support is most needed, creating tailored programs that promote a healthy work-life balance, stress management, and overall employee wellness.
Our services range from developing wellness workshops and fitness challenges to offering resources for mental health support. We aim to foster a supportive environment where employees feel valued and have access to the tools they need to maintain their wellbeing.
Recruitment support
Our recruitment support services are designed to streamline the hiring process for our clients, ensuring they attract and retain the best talent for their needs. We offer a comprehensive suite of services, including job description development, writing & placing job adverts, screening candidates, conducting initial interviews, and facilitating the final hiring steps and onboarding.
Second to last example
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Last example
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
What we do
We can easily adapt to your environment and coach you every step of the way, either on your site, off-site, on the phone or online. You will get a dedicated Consultant to support you with all your people and culture requirements.
Processes & Guidelines
We will tailor your HR processes and policies to perfectly fit your company's unique needs and goals. We conduct a thorough evaluation of your current HR documents, policies & frameworks to identify gaps & improvement areas.
We will then work with you to create bespoke documentation, templates, guides, policies and toolkits that suit your internal culture. We also work with our employment lawyer to ensure your documents comply with current legislation so that your HR department has the fundamentals in place to operate smoothly (without going overboard with paperwork)!
People & Culture Strategy
In the initial phase of our collaboration, we engage with clients through either an employee engagement survey or a client discovery session. This step allows us to gather essential insights into the current HR dynamics and employee perspectives. The outcomes from these discovery phases allows us to craft a bespoke HR strategy that aligns with business goals and prioritise key focus areas.
Our partnership approach ensures the HR strategy we develop addresses both the immediate and long-term needs of the organisation.
Remuneration & benefits
We collaborate with you to refine your remuneration and benefits approach, ensuring they're competitive and reflect your company's mission. By leveraging market insights, we craft strategies that attract and retain talent while maintaining financial viability.
Our role extends to effectively communicating these benefits to your employees, emphasising their value in supporting both professional and personal growth. This approach boosts employee satisfaction and positions your company as a preferred employer.
Talent management and planning
We help you align your talent strategy with your business goals, identifying skill needs and talent gaps to ensure your workforce is future-ready. Our services include succession planning and talent development, aimed at creating a flexible and growth-oriented organisation.
Our proactive talent management approach focuses on nurturing high-potential employees and fostering a culture of continuous improvement. This keeps your team competitive and engaged, preparing your company for both current and future success with enhanced employee retention.
Organisational design
We partner with our clients to identify key talent needs and develop strategies to attract, retain, and develop the right people. Our approach includes performance management, leadership development, and succession planning, all tailored to enhance your team's capabilities and readiness for future challenges.
Our support extends beyond strategy development; we also provide practical tools and guidance for implementing effective talent management practices. This includes creating engaging employee development programs and establishing clear career paths that motivate and retain high performers.
Diversity and Inclusion
We collaborate with you to develop strategies that foster an inclusive workplace, where diversity is not just recognised but celebrated. Through targeted training programs, policy development, and awareness campaigns, we help create an environment that encourages open dialogue, mutual respect, and equal opportunities for all employees.
Our goal is to ensure that every team member feels valued and empowered to contribute their best, driving innovation and enhancing company performance.
Wellbeing initiatives
We assist our clients in crafting and implementing comprehensive wellbeing initiatives that address the physical, mental, and emotional health of their workforce. By conducting thorough needs assessments, we identify specific areas where support is most needed, creating tailored programs that promote a healthy work-life balance, stress management, and overall employee wellness.
Our services range from developing wellness workshops and fitness challenges to offering resources for mental health support. We aim to foster a supportive environment where employees feel valued and have access to the tools they need to maintain their wellbeing.
Recruitment support
Our recruitment support services are designed to streamline the hiring process for our clients, ensuring they attract and retain the best talent for their needs. We offer a comprehensive suite of services, including job description development, writing & placing job adverts, screening candidates, conducting initial interviews, and facilitating the final hiring steps and onboarding.
Second to last example
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Last example
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Lorem ipsum dolor sit amet, consectetur adipiscing elit.
The New Zealand Government has just announced major changes to leave entitlements. The Holidays Act will be replaced with a new Employment Leave Act, bringing one of the biggest updates to annual leave, sick leave, parental leave, and other work leave entitlements in years.
At the centre of this announcement is a shift from the old days-based system to a new hours-based model. Instead of being allocated fixed days, employees will now build up leave directly from the hours they work. The goal is to fix long-standing payroll issues, give employees clearer entitlements, and help employers align with modern employment laws in NZ. If your business needs help adjusting, People & Culture can support you in staying compliant and managing the transition smoothly. To help you grasp these changes better, let's go through what you need to know.
Why the Employment Act is Changing
The current Holidays Act has caused problems for years. Many businesses miscalculated leave because of confusing rules. This led to costly payroll errors, legal disputes, and frustration for both employers and employees.
The government’s goal with the Employment Leave Act is to simplify entitlements. Instead of leave being based on days, the new system will calculate in hours. This should make it easier to use salary calculator and pay calculator tools, reduce compliance risks, and create a fairer system for staff with irregular hours.
New Employment Leave Act Given by the Government
According to a government announcement published by MBIE on 23 September 2025, new legislation will reshape how leave entitlements are earned, calculated, and used. this September 23, 2025, the new law will reshape how leave entitlements are earned, calculated, and used. Employees will start building entitlements from day one of employment, and all types of work leave will be tracked in hours instead of days.
Here are some of the things employers and employees should take note of:
What is the new annual leave rule in New Zealand?
Annual leave will now accrue at 0.0769 hours for every hour worked. This adds up to four weeks per year for full-time staff. Part-time and variable workers will earn leave in proportion to their actual hours.
This removes the guesswork and makes annual leave entitlements transparent for every worker. Employers must ensure their payroll systems can calculate correctly under the new rule.
Cashing Up Leave based on the New System
Employees can now request to cash out up to 25 percent of their annual leave once a year. While employers are not required to approve every request, having a clear policy in place is important.
This offers employees more flexibility and provides employers with a structured way to manage leave balances.
What is the new law for sick leave in NZ?
Sick leave will accrue at 0.0385 hours per hour worked. For a full-time worker, this equals 10 days each year. The major difference is that sick leave can now be taken in hours instead of full or half days.
This flexibility means staff can take only the time they need, such as for medical appointments, without using up an entire day.
Casual workers and leave entitlements
Casual employees will no longer build leave entitlements in NZ. Instead, they will receive 12.5 percent of their gross earnings in holiday pay. This is an increase from the current 8 percent and gives casual staff higher upfront pay.
Employers will need to adjust contracts and payroll settings to match this new requirement.
Family violence and bereavement leave
Both bereavement leave and family violence leave will be available from the very first day of employment. This ensures employees can access essential support without waiting for a six-month stand-down period.
Parental Leave changes
Under the current system, employees returning from parental leave often receive reduced annual leave pay. The new Employment Leave Act fixes this by ensuring leave pay is calculated at the full rate. This change removes an issue that has affected many parents returning to the workforce.
Changes to Workers who earn commission or bonuses
For employees on variable pay, including commission or bonuses, leave payments will be based on actual earnings over the past year. This approach aims to give a fairer reflection of income and ensure holiday pay matches what employees really earn.
Comparing the Old Leave and Holiday Benefits vs New Proposed Employment Leave Act
To understand the impact of the upcoming Employment Leave Act, it helps to look at how things work today under the current leave and holiday benefits compared to what is being proposed. Below is a side-by-side comparison of the key changes:
What is LCP or ‘Leave Compensation Payment’
The new law introduces a concept called the Leave Compensation Payment (LCP). This applies to casual workers who will not earn annual leave or sick leave entitlements like permanent staff. Instead, they will be compensated with 12.5 percent of gross earnings as their leave entitlement.
The goal of the LCP is to give casual employees fair recognition for their work while simplifying payroll for employers.
When will these changes happen?
The Employment Leave Act will come into effect after a two-year transition period. This gives employers time to update systems, review employment agreements, and train managers.
Employers are encouraged to start preparing now by reviewing payroll processes, checking how leave entitlements are tracked, and ensuring compliance with upcoming requirements under employment laws in NZ.
What do these Changes Means for Employees and Employers?
For employees, the changes provide more fairness and clarity. Full-time staff will continue to get four weeks of annual leave and 10 days of sick leave, with added flexibility to cash up part of their balance. Casual staff benefit from higher upfront compensation, and workers on commission will see fairer calculations.
For employers, the changes mean more accuracy and fewer payroll disputes, but also more responsibility. Contracts, payroll systems, and policies must all be updated. Communication with staff will be essential to ensure everyone understands how their entitlement works under the new rules.
Get Through These Changes with People & Culture
The overhaul of leave entitlements is one of the biggest shifts in employment laws in years. While it brings more fairness, it also creates work for employers who must update processes, contracts, and payroll systems.
People & Culture can help you navigate these changes with expert HR consulting and practical support. From updating annual leave policies to ensuring your sick leave and parental leave rules are compliant, our team is here to guide you through the transition. Contact us today to get tailored HR advice and keep your business compliant with confidence.
Not sure where to start?
Let’s have a chat.
