The Employment Leave Act takes effect on 6 August 2028. You can't apply the new rules before then, and full guidance from MBIE is still being released.
So a fair question is: what's actually worth doing right now?
Quite a lot, as it turns out. And none of it depends on knowing every detail of the new rules.
If you've inherited payroll rather than chosen it, and you're not sure where you'd even begin, that's a very normal place to be starting from. Payroll is a specialist area, and not knowing something outside your field isn't a failing. What matters is having two years to work through it properly, rather than three months.
Here's where I'd start.
1. Write down what your employees' agreed hours actually are
Under the new Act, annual and sick leave accrue against an employee's standard hours – the hours they're required to work under their employment agreement.
Which means those hours need to exist somewhere in writing, and they need to be right.
Go through your team and check:
Does everyone have a current, signed employment agreement?
Does that agreement state their agreed hours?
Do those hours match what the person actually works?
That last one is where most businesses find something. Someone's hours changed three years ago and the agreement never caught up. Someone described as casual works a settled pattern every week. Someone's role changed and nobody updated the paperwork.
Why it matters now: this is the input the entire new framework is built on. It's also worth doing regardless – an employment agreement that doesn't reflect reality is a problem today, not just in 2028.
2. Sort out who is casual and who isn't
The new Act distinguishes between standard, additional and casual hours, and treats them differently. Additional and casual hours attract a 12.5% leave compensation payment rather than accruing leave.
That distinction now carries a cost, so it's worth being sure about.
Look at anyone currently set up as casual and ask whether the arrangement is genuinely casual: no obligation on you to offer work, and no obligation on them to accept it. If someone described as casual has worked the same shifts for two years, that's worth a closer look.
Why it matters now: misclassification is already a risk under current law. From 2028 it also changes how their leave is earned and paid.
3. Write down how your payroll actually runs
Not which buttons get pressed. How it works.
Where the hours come from. Who approves them. How leave requests get recorded. What happens with a new starter, a final pay, a mid-cycle pay change. Which steps happen outside the software, in a spreadsheet or someone's head.
If your payroll person was away on pay day, could the next person get the same result?
Why it matters now: you can't change a process you can't see. Every business I work with that has been through a system change found the documentation exercise was the part that surfaced the real issues.
4. Check that your current leave calculations are right
This is the one people most want to skip, and it's the one that matters most.
New legislation doesn't clear historical liability. Employers still have to remediate underpayments that occurred under the Holidays Act, and that obligation continues after 2028.
More practically: any transition to the new rules starts from the balances and data you're holding at the time. Errors don't get tidied up in the changeover. They get carried across.
Worth reviewing:
Whether your software is applying ordinary weekly pay and average weekly earnings correctly
Whether gross earnings include and exclude the right payments
Whether anyone has an unexplained leave balance
How terminations and final pays have been handled
Why it matters now: you have two years to find and fix something. That's a much better position than finding it during a system conversion.
5. List the scenarios you handle by judgement
Every payroll has a handful of situations that get worked out fresh each time. A public holiday falling on someone's non-working day. Someone who works across two roles. A person whose hours change every term.
Write them down. Note how you currently handle each one.
Why it matters now: these are exactly the cases where the new rules will behave differently, and where you'll want to know in advance rather than discover it in a live pay run.
Questions worth asking
Ask your payroll provider:
When will your system be updated for the Employment Leave Act?
What will I need to confirm or provide before that update goes live?
What does the update assume about the data already in my system?
Will you be running a transition process for existing leave balances?
Ask your accountant or bookkeeper:
Who is responsible for payroll compliance in our arrangement – you, me, or the software provider?
Have our leave calculations ever been independently reviewed?
Neither of those questions is a challenge. They're the questions a well-run business should be able to answer, and if the answer isn't clear, that's useful to know now.
The short version
Almost everything on this list is worth doing whether the Act arrives exactly as written, is amended, or is delayed. Accurate agreements, clear working patterns, documented processes and clean data are simply what good payroll looks like.
The new legislation just gives you a deadline.
If you'd like a hand working through the list – or you'd rather someone independent looked at where your payroll actually stands – I'd love to help. A payroll review is usually the quickest way to find out.
About the author
Karyn Campbell is a New Zealand payroll consultant and founder of Payroll Consult. With 5+ years running her own consultancy and a background in payroll software – including roles across client support, onboarding, and partnership management at a leading NZ payroll provider – Karyn brings a rare combination of technical knowledge and real-world compliance experience. She works with business owners, bookkeepers, and payroll teams across New Zealand, specialising in payroll audits, system reviews, and fixing complex payroll issues for teams that don’t work a typical 9-5.
