For more than a decade, the Holidays Act 2003 has been held up as an object lesson in how not to design employment legislation. It is dense, internally inconsistent, conceptually awkward, and operationally hostile to payroll systems. Few dispute that reform is necessary.
The current Government’s response is bold: repeal the Holidays Act entirely and replace it with a new, allegedly simpler, hours‑based Employment Leave framework. On one level, this is welcome. On another, it risks entrenching new inequities while leaving existing ones unresolved.
The uncomfortable question must therefore be asked:
Is law still “good law” if it achieves clarity by accepting and entrenching unfairness and anomaly? And why should the pendulum swing most heavily against those with less access to, and influence over, decision‑makers?
The proposed regime is founded on a single organising idea: leave accrues in hours, in proportion to work performed, from day one.
That logic has intuitive appeal. It eliminates the tortured concept of a “week” for those who do not work traditional patterns, allows for part‑day leave, and reduces interpretive discretion.
It also seeks to remedy several well‑known problem areas:
parental leave return anomalies;
distortion of holiday pay for variable‑hours workers;
the “greater of” calculation framework; and
the payroll remediation issues that have affected large parts of the public sector.
So far, so good.
But simplicity is not synonymous with equity. The re‑engineering of risk within the proposed framework raises a critical question: who bears that risk, and is it evenly distributed? More fundamentally, is it acceptable to design legislation that implicitly produces winners and losers?
A defining feature of the proposal is the introduction of a 12.5% leave compensation payment for:
casual employees; and
employees working hours outside their contracted “standard hours”.
This payment replaces the accrual of annual and sick leave for those hours.
Legally, this is tidy. Substantively, it shifts risk and responsibility in ways that warrant closer scrutiny.
Employees with insecure or fluctuating hours—often lower‑paid, and disproportionately women, Māori, and Pasifika—are effectively being told:
you will receive a premium instead of protected entitlement. The responsibility to manage the consequences rests with you.
This is not a neutral outcome; it is a policy choice.
Cash in lieu of leave has long been treated cautiously in employment law, precisely because income is typically consumed as it is earned, whereas leave functions as a protected entitlement for rest and recovery.
Transforming leave into a wage component risks presenting short‑term financial benefit as equivalent to long‑term wellbeing. It is not. These concepts serve fundamentally different purposes.
The move to pure proportional accrual also marks a philosophical shift and, arguably, a subtle erosion of minimum standards.
Under the existing Act, part‑time employees receive the same minimum sick leave entitlement as full‑time employees once eligibility thresholds are met. This reflects a policy judgement that illness does not scale neatly with hours worked.
Under the proposed framework, sickness, bereavement, and recovery become more closely aligned to hours worked.
The likely result is predictable:
employees with low or fluctuating hours exhaust leave more quickly;
what was intended to operate as a safety net may be depleted by routine, unavoidable absences; and
inequality is reframed as mathematical fairness.
The law becomes internally consistent, but potentially disconnected from lived reality.
The proposed reframing of the “Otherwise Working Day” test is intended to reduce ambiguity. However, the more mechanistic the test becomes, the greater the risk that employees with irregular but established working patterns fall outside its scope.
Public holidays have always reflected more than payroll mechanics. They sit at the intersection of employment law and social policy, reinforcing shared societal values and collective connection.
A system that is simpler to administer, but narrower in application, risks a quiet contraction of those protections.
One of the more striking omissions in the reform narrative is meaningful engagement with remediation.
Employees who were underpaid under a defective statutory framework have been told:
the law was flawed;
compliance was widely difficult; and
the framework will now change.
However, simplification going forward does not, in itself, address past underpayment or restore confidence in the system.
If the practical message is that large‑scale non‑compliance can be overtaken by legislative reform rather than fully remedied, the cost to legal legitimacy is significant particularly in the public sector.
Good law is not merely coherent, administrable, or cost‑effective.
It must also be fair in operation, legally and morally defensible, protective of the vulnerable, and attentive to distributional consequences. A framework that is tidy on paper is a poor substitute for one that is substantively just.
The proposed Employment Leave framework succeeds in reducing complexity and addressing known anomalies. However, in doing so, it resolves ambiguity by making policy choices that create new inequities often affecting those with the least bargaining power.
It is unsurprising that the Bill has been welcomed by many employers as a simplification. But reform inevitably creates both gains and losses. The interests of those adversely affected warrant equal consideration.
As currently drafted, inequities that were once incidental risk becoming embedded by deliberate policy design. That is a significant shift.
Clarity is valuable. Certainty is valuable. But where a statutory framework knowingly produces unequal outcomes, the relevant question is not simply whether it is workable, but whether it is just.
That question remains open.
What do you think?
