Employment Leave Act 2026

The Employment Leave Act 2026 has been passed, but its main framework does not generally operate until 6 August 2028. The Holidays Act 2003 remains the operating leave law until then and, in most cases, continues to apply until the first pay period starting on or after that date under Schedule 1. Section 150 repeals the Holidays Act when the main Act comes into force, subject to savings and transition rules.

There are limited early exceptions. Section 153 and Schedule 1 clause 27 commenced on 7 August 2026 for remediation regulations and pre-commencement consultation only. Certain Parental Leave and Employment Protection Act amendments commence on 1 July 2027. Those early commencements do not start the main leave framework.

For employers, the immediate point is simple. Keep complying with the current Holidays Act while planning for a different framework that is built around hours.

The Act separates work into standard hours, additional hours and casual hours. Standard hours are the foundation for annual leave and sick leave accrual. They must be specified in an employment agreement, work roster or notional roster. For some employees with variable patterns, sections 10 to 12 allow a notional roster, and a Labour Inspector can determine a binding notional roster if needed.

Annual leave accrues at not less than 0.0769 hours for each standard hour or part hour. Sick leave accrues at not less than 0.0385 hours for each standard hour or part hour, up to 160 hours.

Additional hours and casual hours are treated differently in many cases. Instead of accruing annual and sick leave for those hours, sections 124 to 126 generally require a leave compensation payment, or LCP. The minimum LCP is 12.5% of the ordinary hourly rate for each relevant hour, and it must be separately identified in leave records.

The new Act still requires judgment calls in some areas. Sections 13 to 17 set tests for whether a day is otherwise a working day, and section 16 requires the employer to notify the employee of the decision. Employers with variable schedules should expect these decisions to be documented carefully.

Section 121 keeps a premium for work on a public holiday, with the statutory formula and any alternative leave dealt with elsewhere in the Act.

Sections 127 to 129 set detailed record requirements. These include hours worked, itemised pay, LCP, leave accruals, leave taken, public holiday details and balances. The records must be in accessible written form and kept for six years.

For now, the Holidays Act 2003 remains the operating law for annual holidays, sick leave, public holidays and alternative holidays. The new Act should not be treated as if it has already replaced the current system.

Schedule 1 also makes the transition more precise than a simple date change. In most cases, the current Holidays Act continues until the first pay period starting on or after 6 August 2028. Existing annual holidays, sick leave and alternative holidays are converted under Schedule 1 rules rather than being erased and restarted.

That means employers should avoid assuming that 6 August 2028 is the exact payroll switch date for every employee, or that existing balances disappear on commencement.

The Act also deals with a separate issue: historic Holidays Act liabilities. Section 152 allows eligible pre-existing employers to elect into a regulated remediation process for outstanding Holidays Act liabilities.

This is separate from the start of the new leave framework, and it is not the only way to resolve liabilities. Section 153 allows regulations for that process, but those regulations cannot commence before the second anniversary of assent, although consultation can happen earlier.

These are planning steps, not a requirement to reclassify staff or change live payroll now. The current legal framework remains the Holidays Act until the new Act applies under the commencement and transition rules.

The key message is that the new law is enacted future law, not the current operating framework. The best use of the lead-in period is orderly preparation, not early conversion.