Do NZ Employees Get Long Service Leave?

Do NZ employees get long service leave? Usually, not unless you choose to offer it in an employment agreement, workplace policy or another binding arrangement.

That can be a relief if you're drafting contracts and trying to work out what your business must provide. New Zealand has clear minimum leave entitlements under the Holidays Act 2003, but long service leave generally sits outside those minimums.

The tricky part is that once you do offer long service leave, the wording really matters. A generous clause can be a great retention tool, but a vague clause can create confusion about who qualifies, when leave is paid, and what happens if someone resigns.

Is Long Service Leave A Legal Entitlement In New Zealand?

No, long service leave isn't a general legal entitlement for most employees in New Zealand. Unlike Australia, New Zealand doesn't have a nationwide long service leave scheme that automatically applies after a set number of years.

For most private businesses, long service leave only applies if it comes from one of these sources:

• An employment agreement, such as an individual employment agreement or collective agreement
• A workplace policy that has been made contractual or clearly promised to employees
• A historical arrangement, such as an old award, legacy contract or employer practice that still applies
• A specific industry or public sector arrangement, where the terms have been agreed separately

So, if you're checking whether your employee has a long service leave entitlement in NZ, the first place to look is their employment agreement and any policies or letters you gave them when they started.

If there's no clause, policy or agreed arrangement, your business usually doesn't need to provide long service leave. You still need to meet the minimum leave entitlements that apply under the Holidays Act 2003 and other employment laws.

The good news is that if you're setting up your contracts now, you have room to decide whether long service leave fits your business, your budget and your retention strategy.

What Leave Entitlements Do Employees Get Under The Holidays Act 2003?

Employees get several minimum leave entitlements under the Holidays Act 2003, but long service leave isn't one of them. This is where many employers get tripped up, because long service leave sounds like it might sit alongside annual holidays and sick leave as a statutory right.

The core employee leave entitlements in New Zealand include:

• Annual holidays: at least 4 weeks of paid annual holidays after 12 months of continuous employment
• Public holidays: paid public holidays when the day would otherwise be a working day for the employee
• Sick leave: 10 days per year after the employee meets the 6 month eligibility rules, with unused sick leave carrying over up to a maximum entitlement of 20 days
• Bereavement leave: paid leave for qualifying bereavements after the employee meets the 6 month eligibility rules
• Family violence leave: 10 days per year after the employee meets the eligibility rules

Parental leave is dealt with separately under the Parental Leave and Employment Protection Act 1987, and many employers also explain the process in a parental leave policy. Depending on the employee's circumstances, they may have rights to parental leave and government-funded parental leave payments.

Long service leave is different because there's no default rule like one extra week after 10 years or two months after 20 years. If you want to offer something like that, you need to write it into your documents clearly.

It also matters whether someone is genuinely an employee or an independent contractor. Contractors generally don't receive employee leave entitlements. From 2026, the Employment Relations Act 2000 changes include a contractor gateway test, which is designed to help determine when a worker is treated as a contractor rather than an employee. If you're relying on contractor arrangements, it's worth getting employee or contractor advice before making assumptions about leave.

Should You Offer Long Service Leave In Your Employment Agreements?

It depends on what you're trying to achieve. You don't usually have to offer long service leave, but you might choose to offer it if it helps you keep experienced staff and reward loyalty.

Long service leave can work well if your business depends on long-term knowledge, client relationships or hard-to-replace skills. For example, it may be useful in a professional services business where team members build deep client trust over many years.

Before adding it to your employment agreement, think through these practical points:

• Affordability: can your business manage the cost if several long-serving employees qualify at around the same time?
• Coverage: will it apply to all employees, or only permanent employees?
• Timing: will the entitlement arise after 5, 7, 10 or more years?
• Amount: will it be a fixed number of days or weeks?
• Use: can employees take it as paid time off only, or can they cash it out?
• Exit: will unused long service leave be paid out when employment ends?

Say Mike runs a cleaning business with 18 employees. He wants to reward supervisors who stay because replacing them is expensive and disruptive. He offers 5 paid days of long service leave after 7 years of continuous employment, available only to permanent employees. If a supervisor earns $1,200 gross per week, one week of paid long service leave costs the business $1,200 plus the usual employment-related costs. If three supervisors qualify in the same year, Mike needs to plan for around $3,600 in wage costs, plus cover while they're away.

That doesn't mean he shouldn't offer it. It just means the clause should match the numbers your business can actually support.

How Should An Employment Agreement Deal With Long Service Leave?

Your employment agreement should say exactly who gets long service leave, when it becomes available and what happens when employment ends. Clear drafting is the difference between a staff benefit that works smoothly and a promise that causes headaches later.

If you're offering long service leave, avoid a sentence like employees may receive long service leave after a long period of service. That doesn't answer the practical questions your payroll team and managers will need to deal with.

Long Service Leave Clause Outline

You can use the outline below to plan the clause, but don't treat it as a finished legal document. Have a lawyer tailor it before you use it, especially if you have existing staff, a collective agreement or different categories of workers.

1. Purpose: explain that the benefit is offered to recognise long and continuous service.
2. Eligible employees: state whether it applies to full-time, part-time, fixed-term, casual or permanent employees.
3. Qualifying service period: set the exact period of continuous employment needed before leave is earned.
4. Amount of leave: specify the number of days or weeks provided at each milestone.
5. Rate of pay: explain how paid long service leave will be calculated.
6. Taking leave: set out how the employee requests leave and how much notice you require.
7. Business approval: reserve your ability to approve timing based on genuine operational needs.
8. Breaks in service: say whether unpaid leave, parental leave, casual breaks or re-employment affect continuity.
9. Termination: state whether unused long service leave is paid out on resignation, redundancy, dismissal or death.
10. Interaction with policies: make clear whether a separate leave policy can be updated and how it interacts with the agreement.

Templates often miss the tricky parts, especially payout rules and service continuity. If those points aren't clear, you may end up negotiating them at the worst possible time, such as when someone is leaving.

Can You Put Long Service Leave In A Policy Instead?

Yes, you can put long service leave in a policy, but you need to be careful about whether the policy is intended to be binding. A policy can give you flexibility, but only if the wording is handled properly.

If the employment agreement says the employee is entitled to long service leave under your policy, the policy may effectively become part of the contractual package. That can make it harder to change later, especially for existing employees.

If you want to keep flexibility, your documents should clearly explain:

• whether the policy is contractual or non-contractual
• that the policy may be changed from time to time
• who has authority to approve long service leave
• whether any approval is discretionary
• how changes will be communicated to employees

You still need to act in good faith under the Employment Relations Act 2000. If employees have been promised a benefit, or have relied on it for years, you shouldn't simply remove it without thinking through consultation, existing rights and morale.

A practical approach is to put the core promise in the employment agreement if you're definitely offering the benefit, and use a policy for the operational details. For example, the agreement might say an eligible employee gets 2 weeks' paid long service leave after 10 years of continuous employment. The policy might explain how to request dates, how clashes are managed, and how leave is recorded in payroll.

That split can work well, but the two documents need to line up. If they contradict each other, you may struggle to work out which one applies.

Can You Change Or Remove Long Service Leave Later?

Usually, you can't simply remove long service leave from an existing employment agreement without the employee's agreement. If it's a contractual entitlement, changing it will normally require a proper variation process.

For existing employees, take these steps before changing anything:

1. Check the source of the entitlement: review the employment agreement, offer letter, handbook, policy and any past written promises.
2. Work out who is affected: identify which employees have the entitlement and whether anyone has already reached the qualifying service period.
3. Assess accrued rights: consider whether any long service leave has already been earned or become payable.
4. Consult clearly: explain the proposed change, the business reason and what it means in practical terms.
5. Record any agreed change in writing: use a signed variation or updated employment agreement.
6. Update your payroll and onboarding documents: make sure the new rule is applied consistently from the right date.

For new employees, you can generally decide not to offer long service leave, as long as their agreement is clear and you still meet all minimum entitlements.

Be careful with informal promises. If a manager tells staff, everyone gets an extra month off after 10 years, that statement can create expectations and may cause problems if your written documents say something different.

Consistency matters too. If you offer long service leave to some employees but not others, make sure you have a lawful and sensible reason. For example, offering it only to permanent employees may be easier to explain than applying it in an ad hoc way based on who asks.

What Records Should You Keep For Long Service Leave?

You should keep clear records showing the employee's start date, qualifying service, leave taken and any unpaid balance. Even though long service leave is usually contractual, poor records can make it much harder to apply your own rules.

Your employment records should already deal with wages, time, holidays and leave. If you add long service leave, your record-keeping should also cover:

• the employee's original start date
• any break in service and whether it affects continuity
• whether the employee is full-time, part-time, fixed-term, casual or permanent
• the date they become eligible for long service leave
• the amount of long service leave earned
• requests, approvals and declined requests
• leave actually taken
• any balance paid out when employment ends, if your documents allow or require that

For example, Ana starts with your business on 1 April 2020. Her agreement says she receives 10 paid working days of long service leave after 10 years of continuous employment, and unused long service leave is paid out only if employment ends after she has reached 10 years. If Ana resigns on 31 March 2030, she hasn't reached the 10 year milestone under that wording. If she resigns on 2 April 2030, she has. That one-day difference shows why dates and drafting matter.

Your payroll system should be able to track the entitlement separately from annual holidays and sick leave. Long service leave shouldn't be muddled with statutory leave, because different rules may apply to accrual, approval and payout.

Key Takeaways

• Long service leave isn't a general statutory entitlement for most employees in New Zealand.
• The Holidays Act 2003 gives employees minimum entitlements such as annual holidays, sick leave, bereavement leave, family violence leave and public holiday rights.
• If you offer long service leave, it should be written clearly in the employment agreement, a policy or both.
• Your clause should cover eligibility, service milestones, the amount of leave, approval process, breaks in service and payout on termination.
• Once long service leave is contractual, you usually can't remove it from existing employees without an agreed written variation.
• Good records help you apply the entitlement fairly and avoid confusion when an employee reaches a service milestone.

If you'd like help with your employment agreements, long service leave clauses, leave policies and employee onboarding documents, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.