What the Proposed Holidays Act Reform Means for NZ Businesses
Introduction
The New Zealand Government has announced plans to simplify the Holidays Act with a proposed shift to an hours-based accrual model for annual leave. This model aims to provide clarity and reduce the administrative burden for businesses and employees by linking leave entitlements directly to hours worked.
Workplace Relations and Safety Minister Brooke van Velden has expressed her intention to pass this legislation before the next general election, adding urgency to its potential implementation. However, it’s important to note that the Holidays Act has undergone multiple reviews and proposed reforms in the past, many of which have not progressed. Understanding the potential impact of these changes is important for businesses as the discussion evolves.
What is the proposed reform?
The Holidays Act has long been criticised for its complexity. The proposed changes aim to simplify calculations and compliance by:
- Switching to hours-based accruals: Replacing day-based entitlements with an hours-based model for greater clarity and predictability.
- Streamlining compliance: Making leave calculations and tracking easier for employers, especially in industries with diverse workforce arrangements.
- Reducing costs: Simplified processes could lower the risk of errors and reduce administrative overhead.
Why this matters for your industry
The move to an hours-based accrual model could have significant implications for industries that rely on flexibility and variable work patterns:
- Hospitality and retail: With part-time, casual, and seasonal workers making up a large portion of the workforce, an hours-based system could make leave entitlements more transparent and manageable.
- Agriculture and horticulture: Workers in these sectors, often paid piece rates, face highly variable leave payments under the current method. While an hours-based model could simplify calculations, this area might become politically charged and warrants close monitoring.
- Manufacturing and logistics: For shift-based environments, clearer entitlement tracking could ensure fairness and consistency for all employee types.
While these changes aim to provide clarity, businesses across all sectors will need to assess how they impact existing operations and systems.
How to prepare
Even though these changes are still under consideration, it’s worth taking steps to ensure your business is ready:
- Consult your teams
Engage with HR, payroll providers, and employees to gauge how these changes might affect your organisation. - Assess your systems
Check whether your current software can handle an hours-based model or if upgrades are needed. - Stay updated
The proposed reform is in its early stages, and details may change. Staying informed will help your business remain compliant and competitive as the discussion evolves.
How ReadyTech can help
The Holidays Act reform presents an opportunity for businesses to simplify their processes while ensuring fair treatment for employees. By taking proactive steps now, you can position your organisation to adapt to these changes with confidence.
At ReadyTech, we bring proven expertise across key markets—hospitality, agriculture, manufacturing, and retail—and a deep understanding of the stand-up economy. Our experience implementing hours-based accrual systems in Australia positions us to help New Zealand businesses navigate these changes seamlessly.
We’re here to ensure you stay ahead of the curve and turn compliance challenges into opportunities for growth.
