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How payroll software providers can get ready for the changes coming in 2028
There are changes to leave coming into effect on 6 August 2028. Find out what payroll providers can start thinking about now to get ready for the changes.
What's changing in 2028
The new Employment Leave Act will change how leave works from 6 August 2028. It will replace the Holidays Act.
If you have not read about the changes, do this first to understand what they could mean for your software.
We'll provide more guidance soon
We are engaging with payroll providers to develop technical guidance to support the implementation of the changes. We will publish guidance in the coming months that will help you:
- plan and prepare software changes
- support your customers to transition to the new law, and
- convert leave balances to hours and plan transition arrangements.
Check back here for updated information and guidance.
To find out more about what guidance will be available when, have a look at our timeline.
What you should start thinking about
The new law starts on 6 August 2028. This gives you 2 years from 6 August 2026 to understand the changes, assess how they affect your software and plan for any future updates.
Thinking about these changes now will give you time to:
- understand the new requirements
- compare the requirements with your current software
- identify areas that may need future changes so you can plan, design and test software changes if required
- consider the support your customers may need to transition to the new law.
Understanding what changes your software may need
Below is a list of key areas you can check to understand whether your software can support the changes. This will help you compare what your software currently does to what it will need to do, to support the new law.
You can use this information to start identifying what changes might be needed. You can also refer to the legislation to understand more about key definitions.
Employment Leave Act 2026 — New Zealand legislation(external link)
We will publish detailed technical guidance in the coming months. This will give you more information about the changes to help you plan and prepare.
Types of hours
Check whether your software can support:
- recording and managing standard, additional and casual hours separately, and
- applying different rules depending on the type of hours worked.
Notional roster
Check whether your software can support:
- applying a notional roster to work out leave entitlements, and
- applying different notional rosters for different times.
Employees who have 2 or more roles with standard hours
Check whether your software can support:
- treating leave balances and leave pay separately for employees who have 2 or more roles with standard hours, and applying different rules depending on different roles worked, or
- treating leave balance and leave pay together for employees who have 2 or more roles with standard hours, if the employee and employer agree.
Leave accrual and balances
Check whether your software can support:
- calculating leave entitlements in hours
- accruing annual leave and sick leave on standard hours only
- accruing annual and sick leave using the correct rates (if it cannot use the exact rates, it must round up, not down, to meet minimum entitlements)
- applying a sick leave cap for employees who get the minimum number of sick leave hours
- recording leave entitlements that are more generous than the legal minimums, if these have been agreed by the employer and employee
- applying rules for when annual leave or sick leave does not accrue, for example, when an employee takes unpaid leave or receives ACC compensation
- allowing limited leave top-ups while an employee receives ACC compensation, and
- tracking leave balances clearly and accurately, including tracking anniversary dates for cashing-up annual leave.
Leave compensation payment (LCP)
Check whether your software can support:
- applying the LCP to additional and casual hours only
- calculating the LCP correctly, including the minimum 12.5% ordinary hourly rate calculation for each hour
- accounting for employees who move from standard hours to casual hours, and the other way around, and
- including the LCP in each pay cycle.
Leave pay calculations
Check whether your software can support:
- calculating leave pay in hours using the leave hourly rate
- including the correct types of earnings (for example, base pay, piece rates and fixed allowances), and
- excluding variable payments where required.
Pay statements and record-keeping
Check whether your software can support:
- generating clear pay statements (payslips)
- recording how leave and pay have been calculated to support employers with record-keeping requirements, and
- protecting family violence leave information.
Considering future software updates
Once you’ve identified the gaps between your current software and the new requirements, you can check:
- what changes are needed
- how long it will take to design, build and test them, and
- what support customers might need to change employee data or payroll processes, including converting leave balances into hours.