A major change to how leave is calculated in workplaces has become law.

The Employment Leave Bill passed its third and final reading in Parliament on Wednesday evening.

The legislation repeals the Holidays Act 2003, attempting to simplify the regime for both workers and employers.

Speaking at the third reading, Workplace Relations and Safety Minister Brooke van Velden said the bill delivered long-overdue reform to “one of the most complex and problematic areas of our employment law”.

It means annual and sick leave will now be accrued in hours, rather than days.

Additional and casual hours will not accrue annual or sick leave, with employers having to pay a 12.5% leave compensation payment for these hours instead.

All employees, including casuals, will be able to access annual, sick, bereavement, and family violence leave from the first day of work.

Workers will also be able to cash in up to 25% of their total annual leave balance every year.

Van Velden said the bill removed the need for “confusing conversions” between hours, days, and weeks, and its passing was an “important milestone” for New Zealand’s workplaces.

“This bill delivers a simpler, fairer, and more workable system,” she said.

All three opposition parties opposed the legislation, with Labour saying it would mean part-time workers would have to choose between going to work sick or losing pay, and people who worked extra hours would not have it reflected in the leave they earn.

In his contribution to the debate, Labour MP Phil Twyford said the legislation took from those who could least afford it.

“From all of the documents, from all of the debates we’ve had in the House, all the submissions we heard at Select Committee, all of the exchanges with the minister in the Committee Stage, it’s clear that she and this government have chosen to prioritise administrative efficiency for employers at the expense of part-time and casual workers, who lose money and lose time off as a result of this law.”

The Public Service Association had campaigned heavily against the bill, with national secretary Fleur Fitzsimons saying 200,000 workers faced a pay cut if the bill passed.

 

The changes will have a 24-month lead-in time to give businesses and payroll providers time to prepare. There will also be an additional year after the legislation comes into force to update leave terms in employment agreements.