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In this follow up episode, Partners Gillian Service and Megan Evans, discuss the Holidays Act reform. They explore why the reform is significant, what operational changes employers should prepare for, and how these changes aim to simplify compliance and reduce litigation. From hours-based leave accrual to mandatory pay statements and the introduction of leave compensation payments, Gillian and Megan provide practical insights and highlight key challenges businesses may face during the transition period.

[01:06] Gillian explains that unclear laws lead to non-compliance and litigation. Megan adds that previous governments have tried and failed to fix the Act, making this overhaul a significant milestone. They stress that operational details will matter greatly.

[03:05] They discuss, when do extra shifts become “contracted”? And they explain that regular overtime may need to be reflected in employment agreements to avoid misclassification and miscalculation of entitlements.

[06:05] Gillian highlights that under the new system, employees may experience a drop in pay during leave compared to the current system. Megan stresses the importance of educating employees about this change.

[07:35] Gillian and Megan discuss the ability to take leave in hours rather than full or half days, which benefits employees but adds complexity for employers, especially those with variable schedules. They introduce the concept of a “notional roster.”

[09:04] Megan clarifies how allowances will be treated under the new system. Fixed allowances must be included in leave calculations, while variable components like bonuses and commissions will not. Employers may need to renegotiate contracts.

[10:34] They discuss that public holidays will use a clearer “seven out of 13 weeks” test, replacing the current multi-factor approach. This should reduce litigation but requires employers to track work patterns.

[11:34] Gillian and Megan discuss the two-year transition period. While generous on paper, it may be tight for large employers with complex systems. They note that early implementation is not allowed.

[13:02] They explore the new system, employees can cash up 25% of their hourly leave balance annually. This could help employers manage large leave liabilities but requires employee initiation.

[15:32] Gillian summaries that employers must still remediate historic liabilities, but once an agreed amount is paid, no further claims can be made. This approach aims to reduce compliance costs.

[17:37] Gillian and Megan discuss the bill that is expected in early 2026, followed by the select committee process. They cover how the Government aims to pass legislation before the next election and is actively seeking feedback from businesses and employers are encourage to make submissions and share practial insights to ensure the reforms are workable, enduring and straight forward. 

Information in this episode is accurate as at the date of recording, 20 November 2025.

Please contact Gillian Service, Megan Evans or our Employment team if you need legal advice or guidance on any of the topics discussed in the episode. 

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For show notes and additional resources visit minterellison.co.nz/podcasts