Everything Employment Leave Bill 2025

Imagine starting a new job full of enthusiasm, only to face an unexpected illness just weeks in, with no paid sick leave to fall back on until the six-month mark under the current rules. Or, as a part-timer, wondering why your hard-earned days off don't quite match your reduced hours, yet you're entitled to the full 10 days anyway.

These scenarios capture the everyday frustrations many New Zealand employees face with the Holidays Act 2003, a system plagued by complexity that has led to billions in remediation payments for miscalculations. As an employment relations specialist with years of supporting workers through these challenges, I understand the toll it takes – the uncertainty, the financial strain, the quiet resentment. The proposed Employment Leave Bill 2025, announced in September 2025, seeks to overhaul this by replacing the Act entirely with a simpler, hours-based framework. While not without trade-offs, it promises day-one access for key leaves and clearer entitlements, tailored to whether you're permanent, fixed-term, or casual. Let's explore these changes thoughtfully, so you can anticipate their impact on your work life.

A Fresh Approach to Access: Leave Accrual from Day One Across Employment Types

 The existing Holidays Act entitles most employees to 10 days of sick leave after six months of continuous employment – or via the work test for those with prior service – with no pro-rating for part-timers, meaning everyone gets the full amount regardless of hours worked. Annual leave vests after 12 months at four weeks, while bereavement and family violence leave also carry waiting periods. The new bill introduces hours-based accrual starting from your first day for annual, sick, bereavement, and family violence leave, aiming to eliminate delays and align entitlements with actual effort. This shift to precision – accruing roughly 0.0769 hours of annual leave and 0.0333 hours of sick leave per hour worked – allows for flexible, bite-sized usage, but it means pro-rating based on your contracted hours.

The implications vary by employment type, reflecting the bill's intent to create equivalence while addressing variability:

• Permanent employees (ongoing full- or part-time roles): You'll benefit from immediate accrual without the six- or 12-month waits, building leave steadily from shift one. Full-timers maintain near-equivalence to today, but part-timers may accrue fewer sick days (e.g., around five for a 20-hour week), trading volume for prompt access and hourly flexibility.

• Fixed-term employees (contracts for a defined period, such as project or parental cover): Treated similarly to permanents, you'll accrue pro-rata from day one, with entitlements paid out at contract end if unused. This removes old opt-outs for short terms (under 12 months), ensuring fairer coverage without the 8% holiday pay alternative for brief roles.

• Casual employees (on-call with no guaranteed hours): No accrual applies; instead, a 12.5% loading on gross earnings (up from 8%) compensates for annual and sick leave upfront, simplifying cash flow but potentially yielding less if hours average high over time. You'll still access bereavement and family violence leave directly from day one.

This foundational change fosters predictability, especially for those in transitional roles. Yet, as we turn to sick leave specifics, it's clear the pro-rating introduces nuances worth considering.

Refining Sick Leave: Towards Precision, with Pro-Rata Adjustments

Currently, the 10-day sick leave entitlement – usable for personal illness, injury, or caring for dependants – accrues without pro-rating, allowing part-timers and qualifying casuals (averaging 10 hours weekly) the full buffer after six months, up to a 20-day carryover cap. The bill preserves the 10-day annual benchmark but enforces pro-rata accrual based on hours from day one, enabling granular tracking and usage while capping accumulation at 20 days. Notably, it excludes commissions and bonuses from calculations, potentially lowering pay rates for variable earners, and halts accrual during ACC periods – shifts that have drawn scrutiny.

 Here's how this recalibration affects different workers:

• Permanent employees: Immediate eligibility removes the wait, suiting those with health needs early on. However, part-timers face reduced totals (pro-rated to hours), which the unions have criticised as disadvantaging vulnerable groups, such as caregivers.

• Fixed-term employees: Accrual aligns with permanents, pro-rated to your term's length – a gain for mid-contract illnesses, though shorter gigs may yield limited banks before payout.

• Casual employees: The 12.5% loading embeds sick leave compensation, bypassing accrual complexities. This upfront model aids irregular schedules but may under-deliver compared to today's full 10 days for steady casuals, per union feedback.

Overall, these tweaks prioritise administrative ease – with mandatory payslip transparency to boot – but highlight a tension between simplicity and generosity, particularly for part-timers. Transitioning smoothly to broader supports, the bill also enhances bereavement provisions for life's heavier moments.

Expanding Support: Bereavement, Family Violence, and Annual Leave Flexibility

Bereavement leave today offers three days after six months for close family losses, while family violence leave requires no wait but is limited to 10 days annually. The bill extends bereavement to three days for a wider family circle from day one (or after three months via work test), and confirms immediate family violence access, both accruing hourly. Annual leave sees hourly takedowns and up to 25% cash-out annually, plus full-rate pay post-parental leave – a boon for returning parents.

By employment type:

• Permanent employees: Day-one availability provides timely relief, with cash-out options aiding financial planning amid grief or recovery.

• Fixed-term employees: Equivalent access ensures coverage during contracts, vital for temporary roles in high-stress sectors.

• Casual employees: Direct eligibility for these non-accrual leaves offers essential, non-monetary buffers, complementing the loading without added admin.

These expansions underscore a more empathetic system, though unions note gaps like ACC accrual pauses could strain longer absences.

Navigating the Path Ahead: Practical Steps and Considerations

With the bill slated for parliamentary introduction soon and a 24-month implementation window post-passage, there's ample time for adaptation – including payroll overhauls affecting 2.2 million contracted workers and tens of thousands of casuals. Permanent and fixed-term employees stand to gain from swifter, precise accrual; casuals from boosted loadings. Yet, pro-rating may lessen sick leave for part-timers, prompting calls for safeguards.

To prepare, review your agreement against current rules and discuss transitions with your employer. For resolving disputes under the existing Act, consult our guide to leave entitlements and claims. In essence, this bill trades complexity for clarity, empowering you with tools for balanced days – though vigilance on pro-rata effects remains key.

As reforms unfold, stay informed and engaged; your voice shapes them and remember: advocating for fair work isn't just right – it's essential. You've built this system; now refine it for tomorrow.