Proposed Employment Leave Act the reset businesses were looking for

Business Canterbury welcomes the proposed Employment Leave Act which is set to replace the long-criticised Holidays Act - one of the most significant legislative resets for employers in years.

Business Canterbury chief executive Leeann Watson says, "This is the change our business community has been waiting for."

"In my eight years leading Business Canterbury, no single piece of legislation has caused more frustration, confusion, and cost than the Holidays Act. It’s been a compliance nightmare, riddled with complexity, manual payroll interventions and underpayment risk.

"The Holidays Act has been under formal review since 2018 and Business Canterbury has consistently advocated for reform, so we’re pleased to see real progress finally being made.

"The current Act’s leave formulas have been patched-up and added to over the years, creating a confusing system that fits no one well - instead of formulas that work well for most situations and provide flexibility at the margins - which we think the new Employment Leave Act will achieve.

"The overcomplication and uncertainty in the current Act has led many businesses to overpay leave entitlements just to avoid falling foul of the rules.

Industries like manufacturing, hospitality, and retail, which rely heavily on casual and part-time staff have borne the brunt of the current Act’s shortcomings. The proposed changes including hourly accrual of both annual and sick leave, calculated using a single, consistent method will be clearer, fairer, and more practical for employers and employees.

"While the introduction of a simplified Leave Compensation Payment may increase costs for some, the trade-off is greater certainty, fewer payroll errors, and reduced administrative burden.

"One area of caution is the proposal to allow sick leave to be taken in hourly increments. This could pose operational challenges for sectors like manufacturing and hospitality, where short-notice and short-timeframe cover is difficult to arrange.

"This reform is absolutely a step in the right direction and is one of several changes the Government could make to reduce the friction, cost, and risk associated with hiring."

Business Canterbury will continue to support its members with expert HR advice as they prepare for the new legislation, which is expected to take effect in late 2028. It will also work closely with businesses during the implementation phase to ensure their systems, policies, and processes are match-fit for day one.