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New Sick Leave & Holiday Pay Compliance: What Managers Need to Know in 2025

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Emily Rust

New Zealand’s workplace regulations are evolving, and as a people leader, staying compliant is essential. Recent updates to New Zealand's sick leave entitlements and holiday pay calculations mean that businesses must adjust their policies to align with the latest requirements. Here’s what you need to know.

Key Changes to Sick Leave & Holiday Pay

  1. Updated Holiday Pay Calculations

    • Previous Rule: Holiday pay was calculated based on ordinary weekly pay or the average weekly earnings over 12 months, which often led to discrepancies for employees with fluctuating incomes.

    • New Rule: Employers must ensure leave entitlements are calculated fairly and consistently, particularly for employees on variable hours or commissions. Changes aim to prevent underpayment issues highlighted in the Holidays Act review.

  2. Sick Leave Entitlements

    • Previous Rule: Employees were entitled to 5 days of paid sick leave per year after six months of continuous employment.

    • New Rule: Employees are now entitled to 10 days of paid sick leave per year, effectively doubling their allowance. Accrued sick leave can carry over up to 20 days, ensuring workers have access to leave when needed.

  3. Greater Clarity on Leave for Casual & Part-Time Workers

    • Previous Rule: The Holidays Act was unclear on how to calculate entitlements for employees with irregular work hours, leading to inconsistencies in payroll processing.

    • New Rule: The changes seek to simplify entitlements for employees with irregular work patterns, ensuring more transparent calculations and payroll accuracy.

What This Means for Managers

  • Review Employment Agreements – Ensure contracts reflect the updated entitlements and pay structures.

  • Update Payroll Systems – Avoid compliance risks by ensuring payroll calculations are in line with new rules.

  • Communicate with Employees – Keeping your team informed about their leave rights fosters trust and reduces disputes.

  • Prepare for Audits – With increased scrutiny on employer compliance, having clear records of leave calculations is crucial.

Resources for Further Guidance

Keeping up with these changes ensures your business remains legally compliant and fosters a supportive workplace. If you have questions, consulting an HR expert or employment lawyer can help you navigate the specifics.