Employment Leave Bill

Photo courtesy of Ben White on unsplash.com

On 12 March 2026 the Hon Brooke van Veldon (Minister for Workplace Relations and Safety) introduced the Employment Leave Bill for its first reading in Parliament.

The Bill, if passed into law, will repeal the Holidays Act 2003 and replace it with a simpler, clearer, and more transparent framework, the Employment Leave Bill (the Bill)

The Bill has a clear purpose. It intends to simplify how leave is earned and paid., give workers certainty about their entitlements, and restore confidence for employers so they can focus on growing their businesses rather than second guessing payroll calculations.

The Bill introduces an hours-based accrual system for both annual leave and sick leave. This means that leave will be earned, taken, and paid in hours. From day one, employees will earn both annual and sick leave in direct proportion to their standard hours of work. What will change is how leave is calculated. For example, an employee working 40 hours per week will earn the same amount of annual leave, but it will be expressed as 160 hours rather than four weeks.

Another change is how entitlements reflect changes in hours worked. At the moment, annual leave balances automatically scale to match the working week of the employee when they reduce or increase their hours. For example, if an employee increased their standard weekly hours of work, they effectively receive an increase in leave balance immediately without having to earn it. And if they reduce their hours, they effectively receive a reduction in their leave balance. Under the new system, accrued hours will be banked, meaning leave balances will reflect hours actually worked in the past rather than scaling when work patterns change.

Under the Bill, the sick leave accrual rate will provide the hourly equivalent of 10 days sick leave per year for an employee who works five days a week and the same hours every day. Unused sick leave can still be carried over up to a cap of 160 hours, which is the equivalent of the current 20 days. However, adopting hours-based accrual for sick leave will be a change for employees who work less than five days per week. No longer will a part time employee receive the same amount of sick leave as someone working full time. Instead, all employees will receive sick leave hours proportionate to their standard hours.

The Bill introduces a leave compensation payment. Workers with casual hours will be paid 12.5 percent of their ordinary hourly rate for every hour they work, instead of accruing annual and sick leave. For employers, this will remove the burden of tracking leave for casual hours, but for the workers themselves it will mean money in their hand now rather than uncertainty later.

The Bill also intends to fix a very long-standing issue for parents. Under the new system, employees will earn annual leave throughout their parental leave, just as they do now. But when they return and take annual leave, it will be paid like any other annual leave would be, not at a reduced figure, which happens now. This will ensure the Act doesn’t penalise parents for taking leave to care for a new child.

The Bill also provides immediate access to bereavement and family violence leave from day one of employment.

Finally, Minister Van Veldon says the Bill improves transparency and flexibility. Pay statements will clearly show pay and leave balances and workers will be able to cash out up to 25 percent of their annual leave in each 12-month period if they choose to do so.

The Education and Workforce Committee is to consider the Bill and that it be reported to the House by 13 July 2026.