The Holidays Act Has Been Replaced: What Happens Now

After more than two decades of complexity and controversy, the Holidays Act 2003 is being replaced.

On Wednesday 29 July 2026, Parliament passed the Employment Leave Bill at its final reading. It now needs one formal sign-off (Royal assent) to become law as the Employment Leave Act 2026. That's a formality, and the shape of the new system is now settled.

Keeping New Zealand businesses on the right side of payroll law is what we do, and we've delivered through big changes before. We’ve got your back this time too. There's nothing you need to do today; the new rules are still around two years away, and we'll have PayHero ready well before they take effect.

Where things stand

As at 30 July 2026: Parliament has passed the new law. It isn't in force yet, so the current Holidays Act still applies, and you should keep running leave exactly as you do today. 

The timeline

• 29 July 2026: Parliament passed the Employment Leave Act 2026, replacing the Holidays Act.

• Coming weeks: the final sign-off that makes it official. (We'll add the date here once it's confirmed.)

• Mid 2028: the new rules start, and this is when your payroll actually changes over. It's two years after that final sign-off, so the exact date depends on when that happens. (Note: the state schooling sector has a separate, longer transition period under the Bill.)

• A year after the rules start: the deadline to update the wording of your employment agreements.

In practical terms, you've got around two years before anything changes in how you run payroll, and nothing to do today.

What's changing, in short

We covered the detail when the new law was first introduced, and that's still a good guide to what's coming: Employment Leave Bill: What Employers Need to Know.

The big shift is that leave moves from being counted in weeks and days to being counted in hours. Annual and sick leave will accrue in hours based on an employee's standard hours of work, and leave will be paid at a single hourly rate. Hours worked on top of standard hours, and casual hours, will get a 12.5% payment on top instead of building up leave. Annual, sick, bereavement and family violence leave will be available from an employee's first day, pay statements showing pay and leave become compulsory, and there's a new test for working out public holiday entitlements.

Once the final version of the law is confirmed, we'll publish a plain-English walkthrough so you're working from what actually passed rather than an earlier draft.

What we don't know yet

The exact start date. The two-year countdown begins at that final sign-off, and that hasn't happened yet, so we can't put a firm date on it. We know it's about two years away.

Some of the finer details. A few things changed while the law was being finalised, so the exact mechanics, including how your existing leave balances will be converted, need to come from the final law rather than earlier summaries. The government will publish official guidance once everything's signed off.

We've been following this closely all the way, and PayHero has been built in a way that makes it relatively straightforward to implement most of the changes.  We’ll keep you posted as details are confirmed and we begin building.

We’ve got you covered

New Zealand payroll rules change often, and our job is to stay ahead of them so you don't have to read the legislation, work out what it means, or change anything yourself.

We've got the track record to back that up. Our team has now built three payroll platforms(!), and we've come through big compliance changes before. We built PayHero to match the specs outlined in the Holidays Act Guidance first published by MBIE in 2017. When payday filing started, we were the first payroll software to file automatically with Inland Revenue, so our customers stayed compliant without changing how they worked. 

What this means for you

If you already use PayHero: there's nothing to do right now. Keep running payroll as usual under the Holidays Act. When the new rules start, PayHero will be ready for them, including moving your existing leave balances across. We'll give you plenty of notice, clear guidance, and support the whole way through, and we'll be upfront about anything you need to do at your end.

If you're thinking about joining PayHero: come on over. We’ll keep you compliant with the Holidays Act in the interim, and help you switch to the new settings when the time comes. 

We'll keep this page updated as things are confirmed. If you've got questions in the meantime, our team is here to help.