Short answer: yes. Your payroll provider will update their system before 6 August 2028. That's what the two-year implementation period is for, and MBIE has published guidance specifically for payroll software providers on getting ready.
Longer answer: that update will handle the calculation. It won't handle everything the calculation depends on.
That distinction is the difference between a smooth transition and an expensive one, so it's worth being clear about.
What the software will do
Your provider will build the new rules. Hours-based accrual, the 12.5% payment on additional and casual hours, the single hourly leave pay rate, the new otherwise working day test.
They'll do it properly. New Zealand payroll providers have been involved in this reform process for years and they understand what's required.
What the software can't do
A payroll system calculates using the information and the instructions it's been given.
It doesn't independently know:
what an employment agreement actually says
whether someone's agreed hours were entered correctly
whether a person set up as casual is genuinely casual
whether an allowance has been coded as fixed when it isn't
whether the original configuration was appropriate for your business
None of that is a criticism of the software. It's simply what software is: a tool that does exactly what it's told, reliably, every time.
And that reliability is the part worth thinking about.
Wrong settings don't produce errors
If a payroll system is given an incorrect instruction, it doesn't stop. It doesn't flag anything. It produces a result that looks completely normal – and it produces the same result every pay run, consistently, for years.
That's why payroll problems so often go unnoticed until someone leaves, or someone asks a question, or a review is done.
Nothing looked wrong, because nothing ever looks wrong.
The new legislation doesn't change this. It changes the formula the system applies. It doesn't change what the system knows about your employees.
The transition is where it shows up
Here's the practical concern with 2028.
At some point your system will move from calculating leave one way to calculating it another way. That conversion will use the employee records, work patterns, hourly rates and balances you're holding at the time.
If those are accurate, the conversion should be uneventful.
If they aren't, you'll be applying an unfamiliar calculation to data that was already unreliable – and you'll have very little basis for judging whether the numbers coming out the other side are right.
Two years is enough time to be confident about your data. It's not much time to discover you weren't.
What to ask your provider
Worth putting in an email now, so you're not chasing it in 2028:
When will your update be released, and will there be a testing period beforehand?
What exactly does the update change, and what stays the same?
What does it assume about the data already in my system?
What will I need to confirm or clean up at my end before it goes live?
How will existing leave balances be converted?
What support will be available during the changeover?
Good providers will have thought about all of this. Their answers will also tell you how much of the work sits with you.
"We've never had a complaint"
This is the most common reason businesses give me for not looking into their payroll, and I understand it. If nobody's raised anything in ten years, it's reasonable to assume things are fine.
The difficulty is that employees can only query what they can see.
Almost nobody can independently check their own holiday pay calculation. Most people couldn't explain how it's worked out, let alone verify it. So silence isn't confirmation – it's just silence.
Smooth and correct are not the same thing, and the only way to tell them apart is to look.
Where this leaves you
Your software will be ready. The question is whether what you're feeding it will be.
Between now and 2028 there's time to check that your setup reflects your actual employment arrangements, that your current calculations are right, and that your data is clean enough to transition confidently.
Not because you expect to find something. Because then you'll know.
If you'd like someone independent to take a look at how your payroll is configured, I'd love to help.
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.
