Legislation Archives | Edmonds Judd

Big changes coming to holiday pay

September 24, 2026

Business, Employment, Employment Law, Holidays Act, Legislation, Workplace Regulation

Employment Leave Act 2026 comes into force in 2028

The Employment Leave Act 2026 became law on 6 August 2026. It heralds the biggest changes to the administration of employee leave since the Holidays Act was passed in 2003, more than 20 years ago. The legislation, however, is not due to take effect until 6 August 2028, so there is plenty of time for employers to prepare.

Why is it changing?

The current system has proved to be complex and especially challenging to apply to employees who have variable working hours or variable pay through commissions. This has led to a number of well-publicised instances of large public sector organisations having incorrectly paid a large number of their employees for their leave over a substantial period. It is likely that this has happened in the private sector as well.

The situations which have occurred in the public sector have garnered more publicity, given the transparency that applies to public sector organisations.

For example, Health New Zealand, that took over from the 24 former district health boards, is currently going through a complex process of identifying and correcting errors with holiday pay dating back to 2010. Health New Zealand has budgeted $1.8 billion to make up previous short payments to its staff for leave. It is also spending tens of millions of dollars on the investigative and administrative work associated with identifying and correcting these errors.

What is changing?

The fundamental change to be introduced is a switch to calculating leave on an hourly basis. The Act also distinguishes between ‘standard hours,’ ‘additional hours’ and ‘casual hours.’ Broadly, ‘standard hours’ are an employee’s ordinary hours, while ‘additional hours’ are hours worked beyond those standard hours. ‘Casual hours’ are hours worked by a casual employee. The legislation retains the ability for an employment agreement to state that an employee’s salary covers all hours worked.

The general rule will be that annual leave will accrue at the rate of 0.0769 hours for each hour worked. Sick leave will accrue at the rate of 0.0385 hours.

Other significant changes include:

Employees will accrue both annual and sick leave as soon as they begin working. They will no longer have to work for a year before being entitled to annual leave and six months before being entitled to sick leave
Employees will only accrue annual leave for their normal working hours. They will not accrue leave for any additional hours worked. Instead, they will receive an immediate payment of 12.5% of their normal hourly rate for all qualifying hours worked in excess of their normal working hours
Employees will be able to take both annual and sick leave on an hourly basis. They may take one or two hours off work for a medical appointment. Under the current law, technically, they may be required to take a full day’s leave for this
Both annual and sick leave will accrue when an employee is on paid leave or any unpaid leave authorised by any legislation, including parental leave. Leave will not accrue, however, when an employee is receiving accident compensation support
An employee will accrue additional leave for each hour that they work on a public holiday if that day is a normal working day for them, and
Employers and employees will be able to agree for employees to ‘cash out’ up to 25% of the value of the annual leave. At present, the limit is one week’s leave.

What do you need to do now?

As an employer, there is nothing that you need to do immediately. The legislation does not come into effect for two years. In the meantime, however, you need to ensure that your payroll system can handle the changes when they come into effect.

Payroll software providers are aware that they must update their software to enable it to implement the new system when it comes into effect.

Watch out for communications from your payroll software provider. You should also bear the upcoming changes in mind if you are considering changing your payroll system.

You must also update the leave provisions in your employment agreements. The Act allows employers a further year after the legislation comes into force on 6 August 2028 to ensure that all employment agreements are updated.

Employers must continue to comply with any provisions in their employment agreements that are more favourable to employees than the Act during this first year. The minimum statutory terms will override any employment agreement that remains unchanged at the end of this period.

If you need guidance on updating your staff’s employment agreements, or any other aspects of this new legislation, please don’t hesitate to contact us.

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Content Copyright © NZ LAW Limited, 2026. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

Modern Slavery Bill

August 5, 2026

Business Law, Employment Law, Human Resources, Human Rights, Legislation, Supply Chains, Workplace Law

Implications for business

The introduction into Parliament of the Modern Slavery Bill has brought awareness of how modern slavery has manifested itself into New Zealand businesses. Modern slavery can rear its ugly head in a range of ways from forced labour in supply chains, exploitation (or coercion) of workers and various forms of trafficking.

The Bill has also made history as it is the first time a bill has been introduced through Standing Order 288. This allows a Private Member’s Bill to bypass the random ballot (or ‘biscuit tin’) process if it is supported by two-thirds of non-executive MPs.

This Bill was co-sponsored by Labour MP Camilla Belich and National MP Greg Fleming. This bi-partisan effort shows the importance of the Bill not only to our parliamentarians, but also to New Zealand society.

What is modern slavery?

Modern slavery is often seen as a global matter and, for many New Zealanders, it probably feels like an issue away from our shores. Unfortunately, this is far from the truth. World Vision currently estimates that the average Kiwi spends around $77 a week on goods linked to various forms of modern slavery.^[1] Walk Free’s 2023 Global Slavery Index estimated that in 2021, there were 8,000 individuals on any given day, living in modern slavery in New Zealand.^[2]

In a high-profile case in the modern history of slavery in New Zealand, Joseph Matamata was convicted of 13 charges of slavery and 10 charges of human trafficking involving labourers working in orchards. After bringing the labourers to New Zealand with promises of a better life, Matamata retained their income, restricted communication and movement, and used threats of violence to ensure the labourers stayed in their jobs.^[3]

The Bill

The Bill is both broad and extensive in defining modern slavery. It is defined as:

Crimes already understood in the Crimes Act 1961:
– Dealing in slaves, as well as debt-bondage or sefdom
– Dealing in people under 18 for sexual exploitation, removal of body parts, or engagement in forced labour
– People trafficking, and
– Coerced marriage or civil union

The ‘worst forms of child labour’ under Article 3 of the International Labour Organisation Convention No. 182
Trafficking as defined by Article 3 of the United Nations Protocol
Forced or exploitative labour
Servitude, and
Sexual exploitation.^[4]

Outside of the definition of modern slavery, the Bill requires the Minister to report annually on modern slavery matters, to publish guidance and to direct the Chief Human Rights Commissioner to designate modern slavery as a ‘priority area’ if necessary. The Bill will lead to the creation of a Modern Slavery Statement Register to be publicly accessible. All this will be overseen by the proposed independent Anti-Slavery Commissioner.

What does this mean for business?

The Bill currently states that ‘reporting entities’ are required to:

Prepare and publish annual modern slavery statements that describe their structure and supply chains
Identify modern slavery risks (both real and potential)
Outline what steps the entity is taking to deal with the identified risks, and
Lodge these statements on the Modern Slavery Statement Register.

A ‘reporting entity’ in the Bill is defined as a business with a consolidated annual revenue that exceeds $100 million. These entities not only refer to New Zealand entities, but also any overseas company carrying on business in New Zealand. These entities can be both public and private organisations, with government agencies also being captured under this regime.

How this affects New Zealand businesses

If your business is considered a reporting entity under the Bill, non-compliance with the regime could carry a strong penalty. Offences will be committed if entities fail to comply with their reporting obligations, or if they knowingly make false or misleading statements in their reports. These offences could amount to reporting entities being liable on conviction to a fine of up to $200,000.

From a civil point of view, the maximum pecuniary penalty for a contravening reporting entity is $600,000.

This also imposes personal liability for directors and individuals involved in management. If an offence occurs with the permission, knowledge or presumed knowledge of these individuals, they will be found guilty. This is particularly important if the director or management should have known it was occurring but failed to take reasonable steps to prevent it from happening.

The final important note for businesses is that if they are found to be non-compliant, both the name of the business and the individuals responsible will be published on the Register for three years.

Preparing for the Bill to become law

Many affected by the reporting obligations of this Bill may already be familiar with its obligations, considering there are similar laws in other jurisdictions. However, potential ways to prepare for the implementation of the modern slavery legislation in New Zealand could be in the form of preparing policies and governance, reviewing supply and procurement contracts (and being particularly diligent about who your suppliers are), and potentially establishing internal whistleblowing procedures.

Other steps could involve identifying risk factors that may facilitate the exploitation of workers, and developing management plans to mitigate them. The Ministry of Foreign Affairs and Trade has a range of specific resources all targeted towards combatting modern slavery.^[5]

A positive development

This Bill is widely seen as a positive development in New Zealand law. While there may be concerns on the extent of obligations imposed on entities, the benefits to victims undoubtedly outweigh the costs. If you are concerned that this proposed legislation may affect the way you do business, please don’t hesitate to contact us.

^[1] https://www.worldvision.org.nz/about/media/parliamentary-rule-modern-slavery-act-for-nz/

^[2] https://www.walkfree.org/global-slavery-index/country-studies/new-zealand/

^[3] Joseph Auga Matamata v R [2020] NZHC 1829.

^[4] https://www.legislation.govt.nz/bill/members/2026/242/en/latest/#LMS1569519

^[5] https://www.mfat.govt.nz/en/trade/nz-trade-policy/combatting-modern-slavery

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2026. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

Legislation