Employers: get your hours records ready for the Employment Leave Act

What changes on 6 August 2028

The Employment Leave Act 2026 received Royal assent on 6 August 2026 and comes into force on 6 August 2028, when it replaces the Holidays Act 2003. Until then, Employment New Zealand says you must follow the Holidays Act, and you cannot start following the new law early, even if you are ready.

For each person already employed, the new entitlements and payments start with their first pay period that starts on or after 6 August 2028. For the first year, a term in an existing agreement that is better for the employee still applies. From 6 August 2029, every agreement must comply with the Act, and where one does not, the Act's minimums apply.

Our article on what the Employment Leave Act changes sets out the new entitlements from the employee's side. This one is about the records you will need to keep them right. Employment New Zealand plans employer guidance from November 2026 to January 2027, including converting leave balances and handling hours, shifts and rosters, so check back as it appears.

Leave that grows with every standard hour

Under section 24, an employee accrues at least 0.0769 of an hour of annual leave for each standard hour, or part of one. The Act's own example: 37.5 standard hours a week builds 2.88375 hours of annual leave. Sick leave accrues at least 0.0385 of an hour for each standard hour, up to 160 hours unless you agree to more (sections 73 and 75).

The key word is standard. Standard hours are the hours the agreement says you may require and must pay for, plus paid breaks, plus the hours someone would have worked while on paid leave. They have to be set out in the agreement, a roster, or a written notional roster where the hours cannot otherwise be worked out. Other hours are treated differently:

The 12.5% is the leave compensation payment, worked out on the ordinary hourly rate for each relevant hour and paid every pay period. Extra hours a salaried person works are not additional hours if the agreement says the salary covers them. Employees can also ask in writing to cash up as much as 25% of their annual leave balance each year, and you must consider the request within 14 days. Calculate.co.nz has an hourly leave accrual calculator for the arithmetic.

Why daily hours records will drive leave balances

Today, many leave questions can be answered in days. From 2028, nearly every one needs hours, and often a count of days worked over a recent period. Five places in the Act depend on what your hours records say:

• The leave record itself. Section 127 requires the hours worked each day in each pay period, the leave accrued each pay period, and the hours of each kind of leave taken on each date.
• Public holidays. Where the agreement does not set the days someone works, or they have worked extra days, a public holiday is an otherwise working day if they worked, or were on leave, on 50% or more of the same weekday in the 13 weeks before (section 14). If the agreement does not say how many hours they would have worked, it is their average daily hours over the pay periods starting in the previous 93 days (section 15). You must tell them the answer as soon as practicable.
• Leave compensation payments. Each pay period you need the number of additional or casual hours, kept apart from standard hours, to pay the 12.5%.
• Alternative leave. It accrues hour for hour on a public holiday, so the hours worked that day decide the balance.
• Converting balances. On the switch, sick leave and alternative holidays owed under the Holidays Act are converted using ordinary daily hours: the hours worked or on leave, divided by the days worked or on leave, in the pay periods starting in the 93 days before the first pay period that starts after 6 August 2028. Annual holidays use the weekly standard hours in the agreement, or where those vary from week to week, the average over the work cycle; only where neither applies do they use the same 93 days of hours (Schedule 1, clauses 12, 18 and 22).

So the hours people work in roughly the three months before the switch will set balances that last for years. If those records are patchy, a converted balance is a guess. Where hours cannot be worked out from the agreement, a Labour Inspector setting a notional roster may give more weight to the most recent 13 weeks of work patterns than to the agreement. Anyone working casual hours on 6 August 2028 is paid out the annual holidays they hold that day, and their sick leave under the Holidays Act ends.

Pay statements and the new records

Today, Employment New Zealand says payslips are not required by law unless the employment agreement provides for them. From 6 August 2028, a new section 130A of the Employment Relations Act 2000 requires a pay statement for every pay period someone works or is on paid leave. It shows their name, IRD number and the pay period, pay itemised by category (ordinary rate, leave compensation payment, overtime, penal rates, allowances and so on), the net pay, deductions, employer contributions such as KiwiSaver, and leave accrued, taken, paid and owed. Family violence leave must never be identified on it: pay for it shows as a part of pay that does not say what it is for.

The wages and time record changes too. Section 130(1)(g) becomes the hours worked each day in each pay period, with new lines for pay by category and the hours on which a leave compensation payment is paid. Both records are kept for at least six years after each entry, and longer if a Labour Inspector requires it or a case needs them. Where someone works agreed usual hours, stating those hours is still enough, but the hours needed to show minimum entitlements, such as the minimum wage for salaried staff working long weeks, must be recorded. Our article on wage and time records covers what you must keep today.

What to start now

Employment New Zealand says you do not have to do anything yet, but it asks employers to make sure payroll data is correct before balances convert, because errors carry over and are harder to fix later. Its planning guide suggests reviewing payroll and employment data between February and July 2027. Habits take longer to build than systems, so these are worth starting well before then:

• Record actual hours every day, for everyone. Start, finish and unpaid breaks, written on the day. Include salaried staff on the days they work past their usual hours.
• Keep kinds of hours apart. Agreed hours, extra hours someone could have refused, casual shifts, on-call time and public holidays will each be treated differently, so label them now.
• Record leave in hours as well as days. The conversion counts hours on leave, so a day off recorded as 7.5 hours is more useful than a tick.
• Write down agreed days and hours. Where hours vary, think about what a notional roster would say.
• Check today's balances. Fix Holidays Act errors and pay what is owed before anything converts.
• Ask your payroll software provider whether its software will support the new rules and what data it will need from you.

Team timesheets from jobtracker.co.nz gives you a daily record of the hours your people choose to share, with start, finish and breaks by person, project and task, and a CSV for any period. It does not calculate leave, keep leave balances or run payroll, so it sits beside your payroll and leave records rather than replacing them. For anything complex, such as multiple roles or availability provisions, call Employment New Zealand on 0800 20 90 20 or ask an employment lawyer.

A record of hours that is ready for 2028