Parliament has passed a new law that replaces the old holidays law with a different system. Your leave will now be tracked in hours instead of days, and you can choose to get paid out for some of your annual leave.

Workplace Relations and Safety Minister Brooke van Velden put forward the bill. It was introduced on 9 March 2026, debated on 12 March, and passed on 29 July 2026 (RNZ).

Under the new law, annual leave and sick leave build up in hours rather than days. Everyone, including casual workers, can use annual, sick, bereavement, and family violence leave from their very first day on the job. Workers can also choose to get paid for up to 25% of their annual leave instead of taking it as time off.

Extra hours and casual hours will not build up annual or sick leave. Instead, employers must pay an extra 12.5% on top of those hours to make up for it (RNZ).

The law also changes what happens when you work on a public holiday. You build up one hour of alternative leave for every hour you work on a public holiday you would normally have worked. You can get that alternative leave paid out at any time (Business Canterbury).

The government started working on this in September 2024, when the Ministry of Business, Innovation and Employment (MBIE) asked for feedback on a draft bill. Cabinet agreed to the plan in September 2025, with MBIE saying the new system would be simpler and easier to use (MBIE). A select committee report on the bill came out on 12 March 2026 (Select Committees).

All three opposition parties — Labour, the Greens, and Te Pāti Māori — voted against the bill. Labour MP Phil Twyford said the law made things easier for employers but at the cost of part-time and casual workers (RNZ).

The Public Service Association (PSA), a major union, campaigned hard against the bill. Its national secretary Fleur Fitzsimons said 200,000 workers faced a pay cut if the bill passed (RNZ).

Businesses and payroll providers have 24 months to get ready for the changes. Employers get an extra year after that to update the leave terms in their workers' agreements (RNZ).

The background here is that the old Holidays Act 2003 was widely seen as hard to follow and apply correctly. Think of it like a recipe written in cups when your kitchen only has scales — the old law measured leave in days, which did not fit neatly with irregular or part-time hours. Moving to hours is meant to fix that. But it also means payroll systems and employment agreements built on the old system will need to be rebuilt from scratch.

The 12.5% extra payment for additional and casual hours is the part that drew the strongest opposition. The government says it fairly pays workers who do not build up leave on those hours. The PSA argues that getting cash instead of built-up leave is a cut to what workers are entitled to, especially for casual and part-time workers who rely on extra hours for a big chunk of their income. Twyford's criticism points to the same issue: the bill makes things simpler for employers, but it also changes the basic deal for casual and additional hours, and whether that is fair depends on where you stand.

Letting casual workers access leave from day one is a clear improvement for people who under the current system often had to wait before they qualified. But whether that is enough to satisfy the unions who opposed the bill is a different question. The PSA's figure of 200,000 affected workers shows how many people the union believes will be worse off, and the fact that every opposition party voted no means the reform does not have broad cross-party support.