New Zealand’s Hours-Based Leave System Goes into Effect in August 2028

In August 2026, New Zealand enacted the Employment Leave Act 2026, which changes the way employee leave and public holidays are calculated by creating an hours-based system for leave entitlements. The legislation replaces the Holidays Act 2003.

The new hours-based system represents a shift from the practice of providing leave as an annual entitlement. Starting on August 6, 2028, employees will begin accruing annual and sick leave according to the hours worked, and an employee will use one hour of accrued leave for each hour of leave taken. The new system will allow workers to take partial days off.

In place of annual and sick leave accrual for additional and casual hours, workers will be given an upfront leave compensation payment of 12.5% of a worker’s ordinary hourly wage. Additionally, a clearer Otherwise Working Day test will determine public holiday entitlements, and alternative holidays will use hours-based accrual. (An “otherwise working day” is a day of leave that’s taken on a day an employee would ordinarily work; for example, sick leave is leave taken on days an employee is meant to be working.)

The same hourly leave pay rate, which is based on the employee’s lowest hourly rate for the shift from which leave is taken, will be used to calculate how leave is paid.

Sources: Ministry of Business, Innovation & Employment, Littler