Simplifying New Zealand’s Holidays Act reforms

IN Partnership with

As New Zealand overhauls its Holidays Act, employers face a pivotal opportunity to streamline processes, embrace technology and ensure compliance. Discover how the changes will impact businesses and employees alike

NEW ZEALAND’S Holidays Act 2003 sets out minimum holiday and leave entitlements for employees. However, it’s long been a thorn in the side of HR departments. Criticised for its complexity and ambiguity, the Act’s opaque nature has often led to compliance issues and payroll errors. In response, the government has initiated a series of changes aimed at simplifying the legislation. These include moving from a weeks-based entitlement system to a weeks-based accrual system for annual leave, pro-rating sick leave entitlements, and introducing clearer methodologies for calculating leave for employees with variable working arrangements. So, what do these reforms mean for HR professionals? HRD spoke to experts from Dayforce, a global leader in HR technology, to break it down.

Dayforce makes work life better. Everything we do as a global leader in HCM technology is focused on improving work for thousands of customers and millions of employees around the world. Our single, global people platform for HR, payroll, talent, workforce management and benefits equips Dayforce customers to unlock their full workforce potential and operate with confidence. To learn how Dayforce helps create quantifiable value for organisations of all sizes and industries, visit dayforce.com/au.

Find out more

“Technology can highlight anomalies in payroll, and this allows them to be addressed before we reach a situation where payroll has been run incorrectly”

Travis Ryland, Dayforce

At their core, the reforms to the Holidays Act are about simplification. Travis Ryland, enterprise account executive at Dayforce, says the current legislation is particularly difficult for organisations with non-traditional workforces. This is particularly relevant as we see a rising gig economy and more casual employment, and so the legislation needs to better align with the modern way of working. “Currently, the Holidays Act mentions four weeks of leave, but that week can be entirely different for every person,” Ryland explains. “If you normally work three days a week, is that a standard week for you? If you’re a shift worker who has just picked up an extra day, have you just accrued an additional third of a week? These are the decisions that organisations have to make.” Ben Kropman, senior manager of Solutions Advisory ANZ at Dayforce, adds that the current Holidays Act has led to interpretations that vary from company to company, and ultimately, from law firm to law firm. This inconsistent application creates significant uncertainty, which the reforms are aiming to eliminate. Kropman notes that data management is another critical challenge under the current Act. “You need to know when someone works, how often, whether they’re entitled to a public holiday, etc,” he explains. “Getting all that data into one spot to facilitate the calculation in the first place can be a hurdle. We’ve found very little consistency in this space overall, and on how to mitigate the risk of underpayment.”

For HR leaders, adapting to the new Holidays Act is not just about waiting for the new rules to take effect – it’s about getting your systems, processes and people ready now, to ensure a smooth transition. HR leaders should see this as an opportunity to evaluate their current compliance strategies and identify areas that might benefit from modernisation. Katrina Casteneda, senior product marketing manager at Dayforce, emphasises the importance of conducting a thorough internal review. This means taking a hard look at the systems and processes you’re currently using to manage holiday and leave entitlements.

“Ask how many systems you’re dependent on for the data, whether you have checks and balances to ensure the accuracy and reliability of that data,” Casteneda explains. “Are there any manual calculations you’re doing that could be automated? Identify which processes may be more prone to errors and which could expose your business to risk.” For many organisations, leave calculations rely on a patchwork of outdated manual systems, such as copying data into spreadsheets. It’s no surprise then that errors occur. While these issues may have been manageable in the past, the new reforms are likely to expose vulnerabilities, particularly if inconsistent data or manual errors continue to affect payroll. Consolidating data into a single, reliable source of truth is another critical step. By centralising information, organisations can reduce the likelihood of significant errors in leave calculation or pay. “Finally, partner with someone who prioritises compliance and can help your organisation stay ahead,” Casteneda adds. “You want to ensure that your partners are very compliance-first, and that they have strong, flexible, rules-based engines like Dayforce does.”

Ryland notes that technology vendors have been working hard to prepare for the Holidays Act changes, particularly in terms of understanding the trickier areas like variable workforces. He highlights that Dayforce has been built from the ground up with compliance in mind, and this has led to a platform that updates payroll, HR and leave records in real time. “Automatic calculations are a key area for organisations when it comes to reducing risk,” Ryland says. “Technology can also highlight anomalies in payroll, and this allows them to be addressed before we reach a situation where payroll has been run incorrectly. This is a key area for Dayforce in preparing for these changes.”

“The clarity and simplification that the changes [will] bring, along with our compliance-first approach, should help organisations find it easier to be compliant from the get-go”

Katrina Casteneda, Dayforce

At the heart of the Holidays Act reforms is a vision for a fairer, clearer and more efficient system of managing leave entitlements. For employees, the benefits are obvious: greater transparency and accuracy of leave calculations mean workers can better understand and trust their entitlements. Employees will no longer be left guessing how much annual leave they have accrued or whether their sick leave balances are correct.

For employers, these reforms bring the potential to significantly reduce the compliance burden. By simplifying calculations and ensuring consistency in the management of entitlements, organisations can avoid costly disputes and remediation processes. And for technology vendors like Dayforce, the key focus is on being well-placed to support businesses during this transition. “Compliance is really critical for us,” Casteneda says. “It’s our calling card, and it’s not just an element that sits off to the side. The clarity and simplification that the changes [will] bring, along with our compliance-first approach, should help organisations find it easier to be compliant from the get-go.” To find out more about Dayforce and how it can support your HR department, click here.

Why the Holidays Act needs an overhaul

A better future for both sides

Published 24 Feb 2025

ASIA

News

SPECIALISATION

Events

Best in HR

Resources

Companies People Newsletter

About us Authors Privacy Policy Conditions of use Contact us RSS

News

Specialisation

EVents

Best in HR

Resources

ASIA

Companies People Newsletter

About us Authors Privacy Policy Conditions of use Contact us RSS

News

Specialisation

EVents

Best in HR

Resources

ASIA

Companies People Newsletter

About us Authors Privacy Policy Conditions of use Contact us RSS

Holidays Act: Key proposals

Pro-rata sick leave

A weeks-based accrual system for leave entitlement

Simpler methodologies for calculating use of leave

Objective criteria for pay-as-you-go annual leave

Preparing for change

Sustained ROI

Compliance-first approach

Strengthened payroll

Real-time insights

Dayforce: Key features