Employment Leave Bill: Summary of Select Committee Amendments
On 13 July 2026, the Education and Workforce Select Committee (Committee) reported back on the Employment Leave Bill (Bill). This Bill is intended to replace the Holidays Act 2003. It establishes a new framework for leave, fundamentally changing how leave entitlements are determined, provided and calculated.
You can read more about the original Bill in more detail in our article.
The Committee recommended changes to reflect submissions received during the consultation process on the Bil. On 13 July 2026, the Committee recommended that the Bill is be passed by majority, with all amendments agreed unanimously. While the Committee found no issues with the Bill's overall legislative design, it recommended several amendments to clarify and refine the new leave framework before it is passed into legislation.
On 29 July 2026, the Bill passed its third and final reading in Parliament. Following the recommendations from the Committee, no further changes can now be made. It is now awaiting Royal assent for it to be formally passed into law.
We have summarised some of these key changes recommended by the Committee below:
Notional Rosters
| Current Bill | Proposed Amendments |
|---|---|
| If an employment agreement includes standard hours but does not fully specify how many hours are worked, or the days and times those hours are worked, the employer and employee must agree on a written notional roster when the employment agreement is entered into. The Bill currently requires the notional roster to include information about an employee’s standard hours and when they are worked. The roster would then be used to determine: | Submissions raised concerns that a notional roster may not reflect an employee's real working pattern, leading to unfair outcomes when it is used to calculate leave accrual and access. The Committee recommended amending the Bill to require a notional roster to be, as far as possible, an accurate reflection of an employee's actual pattern of standard hours. This is intended to allow for additional flexibility in the approach for determining the hours and days in a notional roster. The Committee also recommended an alternative approach be introduced where parties may instead agree in the notional roster to a methodology for determining the days and hours that are the employees’ standard hours. |
| • Accrual of annual leave and sick leave; and | |
| • When an employee can take annual leave, sick leave, bereavement leave, and family violence leave. |
Multiple roles with one employer
| Current Bill | Proposed Amendments |
|---|---|
| If an employee has multiple roles under one employer, leave entitlements apply to each role separately, with separate leave balances for each. | Submissions raised concerns that mandatory separate treatment of leave entitlements could lead to administrative burden and can make it harder for employees to get approval for longer periods of leave. The Committee recommended amendments to let an employer and employee agree in writing, how leave entitlements and payments will be treated across their roles including dealing with all roles together. Separate treatment will be retained as the default if no agreement is reached. |
Annual leave
Purpose of taking annual leave
| Current Bill | Proposed Amendments |
|---|---|
| To give employees an opportunity to take paid time away from work. | Submissions contrasted this with the current Holidays Act 2003, which frames annual holidays around rest and recreation. There were concerns that the Bill’s current wording could affect attitudes toward granting leave. The Committee recommended amending the Bill to give greater emphasis to rest and recreation as a purpose of annual leave. |
Annual leave
When annual leave can be taken
| Current Bill | Proposed Amendments |
|---|---|
| Employees will start accruing annual leave from day one of employment (rather than waiting 12 months to be entitled). It provides that an employer cannot ‘unreasonably refuse consent’ for employees to take annual leave from first day of employment. | Submissions felt the Bill’s drafting was not clear on when leave could be taken. The Committee recommended amendments to clarify that employers and employees must: |
| • make all reasonable efforts to agree when leave is taken, | |
| • an employer must not unreasonably withhold consent, and | |
| • that upfront negotiated practices can structure when leave is taken. |
Annual leave
Cashing up annual leave and alternative leave
| Current Bill | Proposed Amendments |
|---|---|
| The Bill continues to allow employees to cash up annual leave/ alternative leave, similarly to how they can under the Holidays Act 2003. However, it currently provides that if an employer makes an incorrect cash-up payment, the employee is entitled to retain both the payment and the underlying leave | Submissions raised concerns about this, as allowing an employee to keep both the incorrect payment and the leave was seen as harsh for employers acting in genuine error. The Committee recommended amendments to allow an employer to recover an overpayment where cashed up leave was incorrectly paid. |
Sick, Bereavement and Family Violence Leave
Proof for leave
| Current Bill | Proposed Amendments |
|---|---|
| Allows an employer to withhold pay where proof of sickness or family violence is not provided but does not clarify whether the leave itself may be continue to be deducted from the employee's balance. | Submissions raised concerns that the lack of clarity regarding deducting from an employee’s balance, along with withholding pay, could risk a double penalty for employees. The Committee recommended amending the Bill to make it clear that an employer must not deduct leave from the employee's balance while withholding pay pending proof. |
Public Holidays
Otherwise working day (OWD) test
The Bill introduces a new way to work out whether a day is an Otherwise Working Day (OWD) for establishing entitlement to paid public holidays:
- A day is an OWD if the employee would normally have worked that day based on the days or work pattern set out in their employment agreement.
- If the employment agreement does not specify workdays, a different test applies.
- Under the new test, a day is an OWD if, during the previous 13 weeks, the employee worked (or was on paid or unpaid leave) on that same day of the week at least 50% of the time.
| Current Bill | Proposed Amendments |
|---|---|
| This test does not apply to employees whose employment agreement specifies any regular workdays, even if they consistently work additional days on top of what is stated in the employment agreement. | Submissions raised concerns that people who have specified workdays in their employment agreement and also consistently work additional days, could be excluded from the OWD test. The Committee recommended amendments so the new OWD test also applies to employees who have some set days but also regularly work additional days. |
Notification of Otherwise Working Day (OWD)
| Current Bill | Proposed Amendments |
|---|---|
| Requires an employer to notify an employee whether a public holiday is treated as an OWD, in all situations. | Submissions raised concerns as to why there is a need for a notification requirement where OWD status is not in doubt. The Committee recommended amendments so the notification requirement does not apply where OWD status is already clear from the days, or pattern of days. set out in the employment agreement. |
Incorrectly accrued leave where LCP should have applied
| Current Bill | Proposed Amendments |
|---|---|
| Where leave was wrongly accrued instead of the leave compensation payment (LCP) being paid, the current Bill lets an employee use or cash up purported annual leave and keep accrued sick leave (without cashing it up), but the employer would not be required to provide the employee with LCP retrospectively. | Submissions highlighted that this approach would not lead to the same outcome for the employee as if the LCP had been correctly applied in the first place. The Committee recommended that when an employee cashes up incorrectly accrued annual leave, an additional payment of 0.92% of the leave payment rate per hour it was incorrectly accrued is to be paid. This value represents remaining component of the 12.5% LCP rate after deducting annual leave (7.69%) and sick leave (3.89%) portions. |
Remediation Framework
The bill introduces an optional process that employers can use to address any unpaid or outstanding obligations under the Holidays Act 2003 (Act). The process would cover the period of six years before the Act is repealed. While an employer is participating in the process, their obligations and liabilities under the Act would be put on hold, new claims could not be filed, and some existing legal proceedings would be temporarily suspended.
Opt in date
| Current Bill | Proposed Amendments |
|---|---|
| Does not clearly specify the date on which an employer is treated as having opted into a remediation process. | Submissions suggested clear opt-in date is needed to mark the start of the process and its associated deadlines. The Committee recommended amending the Bill, so an employer is treated as opting in on the date they notify current employees of that decision. |
Notifying former employees
| Current Bill | Proposed Amendments |
|---|---|
| Employers must notify current employees and make reasonable efforts to notify former employees, who then have two years to seek compensation, with no set deadline for the notification effort and no minimum number of publication channels specified. | Submissions questioned whether the original notification requirements were adequate given the significant potential effect on former employees. Recommended requiring employers to publish notices in at least two of the media types set out in the Bill, and to make reasonable efforts to notify former employees within six months of opting in, after which the suspension on claims lifts for any past employee not yet contacted. |
Minimum payment by regulation
| Current Bill | Proposed Amendments |
|---|---|
| Allows regulations to set a minimum amount payable under the remediation process, below which an employer is not required to pay. | Submitters expressed concern that allowing the minimum payment amount to be set by regulation could reduce transparency and create fairness issues. The reason for including this provision was to avoid situations where employers had to calculate and pay very small remediation amounts, which could cost more to administer than the amount owed. Departmental advisers had also since indicated that a minimum payment threshold is no longer needed due to the expected nature of the remediation calculations. It was recommended that this regulation-making power be removed. |
Transitional Provisions
The Bill provides for a period of time for employers to implement the changes, as summarised below:
- One year after the commencement date (when Bill receives Royal Assent): employment agreements must be updated to align with the new legislation. During that period, any employment agreement terms that are more favourable than the new statutory provisions must continue to be applied. At the end of the transition period, any leave-related terms that are inconsistent with the new leave regime will be overridden by the minimum requirements set out in the Act.
- Two years after the commencement date: Bill comes into force, employers are required to comply. This is to provide time for payroll providers and employers to make changes to business and payroll systems; and
- Up to 10 years after the commencement date: Bill comes into force for the education sector.
Summary of changes, and expected next steps
The Bill and its recommended changes have been met with mixed reviews. Whilst it is intended to make leave calculations easier for employers – something that employers have struggled with since the introduction of the Holidays Act 2003 – concerns have been raised regarding whether the new framework creates greater uncertainty for workers and may leave many employees worse off.
Ahead of the election in November 2026, we expect that this Bill will progress quickly through Parliament, to be passed under this current government. Once it receives Royal Assent, it will be enacted into legislation and the commencement date will be set.
We recommend that employers keep alert for further updates. Our team can assist with your leave compliance, including updating employment agreements and policies, as well as assisting with employee communications around the changes once they are implemented.
Disclaimer: This article provides general information about employment, health and safety, and related legal issues. It is not legal advice and should not be relied on for a specific situation. Please seek legal advice before making decisions about your workplace.
