Part-Time Workers Face Cuts to Sick Leave Under New Law

The government has unveiled major reforms to New Zealand’s Holidays Act, promising a simpler, fairer system but drawing mixed reactions over reduced sick leave for part-time workers.

Workplace Relations Minister Brooke van Velden announced the changes, which will see both sick leave and annual leave accrue based on hours worked rather than fixed entitlements. She described the overhaul as a “win for workers, businesses and the country,” saying it would address widespread non-compliance that has cost employers and government billions in remediation payments, RNZ reported.

“Leave will be earned for the hours that you work, it makes for a very clear, straightforward system,” van Velden said, as quoted by RNZ.

Key Changes

• Part-time workers: Sick leave will be scaled according to hours worked, ending the entitlement of 10 days for those working minimal hours.
• ACC recipients: Workers on weekly compensation will no longer accrue leave while off work, easing liabilities for employers.
• Parents: Employees on parental leave will continue to accrue annual leave at full rates and no longer face reduced pay when taking leave after returning to work.
• Casual workers: Loading will rise from 8% to5% of hourly wages, boosting pay in place of leave entitlements.
• Public holidays: Pay will remain time-and-a-half, but leave will be granted in proportion to hours worked rather than a full day.
• Other measures: Bereavement and family violence leave will be available from day one, pay statements will become mandatory, and closedown notices will increase from two to three weeks.

The reforms will be introduced through a new Employment Leave Bill, replacing the Holidays Act. If passed, the system will take effect two years later, except for schools, which may take up to a decade to transition due to payroll complexities.

The Employers and Manufacturers Association (EMA) welcomed the changes, calling them “clear and workable.” Head of advocacy Alan McDonald said, “It’s fairer. Under the current rules, someone working one shift a week could receive the same sick leave entitlement as someone working full-time. That imbalance needed to be addressed,” RNZ reported.

The New Zealand Council of Trade Unions (NZCTU) supported improvements such as day-one access to sick and bereavement leave, higher casual pay, and better treatment for parents. However, it warned that cutting sick leave for part-timers and excluding bonuses and commissions from holiday pay would disadvantage vulnerable groups, especially women, Māori, and Pasifika workers.

“Reforms should not result in a reduction in worker leave entitlements,” said NZCTU President Richard Wagstaff, reported RNZ.

What’s Next

The government aims to pass the Employment Leave Bill before the next election. While van Velden said the changes balance fairness and simplicity, unions remain wary that part-time and injured workers will bear the cost.

“This is about ensuring clarity and accountability,” van Velden said. “Everyone should know what they’re entitled to, and employers should know what they need to pay,” as quoted by RNZ.