The Government has announced a proposed repeal of the Holidays Act 2003 (Act) and outlined details of the proposed replacement legislation – read on for the key changes.
Workplace Relations Minister Brooke van Velden has stated her intention is to have the new legislation introduced in early 2026 and passed before the next election.
However, there will be a transition period of two years following the passing of the legislation, and it coming into force. The exception to this is employees with the Ministry of Education, who will likely need more time to reform its payroll systems.
Annual leave
Currently, employees are entitled to four weeks of annual leave after 12 months’ continuous employment. The Government is proposing that annual leave will accrue from the first day of employment, at a rate of 0.0769 hours per hour of work – equivalent to four weeks’ annually.
In addition, employees will be able to cash-up 25% of their annual leave balance every 12 months, a change from the current one week. This will increase cash-up amounts for those employees with more than four weeks annual leave accrued.
Sick leave
Currently, both part-time and full-time employees are entitled to 10 days of sick leave per year after six months of employment, with another 10 days added each year.
Proposed is pro-rated sick leave accruing from day one of employment, at a rate of 0.0385 hours per hour. This reduces the entitlements for part-time employees compared to full-time.
Leave compensation payments
Casual employees currently receive 8% compensation in lieu of paid annual leave and only receive sick leave once they have met a particular threshold. Under the proposed changes, casual employees will receive a leave compensation payment of 12.5% of their base hourly rate on all hours worked.
Part-time and full-time employees will receive the leave compensation payment for any additional hours worked, instead of accruing sick or annual leave. There will be exceptions for where extra hours are compensated for by the employees’ salary.
Family violence and bereavement leave changes
Both bereavement and family violence leave will begin accruing from the first day of employment, instead of after six months of continuous employment. This entitlement will remain based on days – however, employees will be able to use part days of leave.
Parental leave
Employees who are new parents will receive annual leave at their full salary rate, rather than at a reduced rate based on their earnings while they were away on parental leave.
Mandatory pay statements
Employers will be required to provide itemised payslips every pay period. Currently this is not an obligation unless specified in the employees’ employment agreement.
If you’d like to know more about the proposed law change, please reach out to our expert Employment Law experts.
