The much-anticipated proposed changes to the Holidays Act 2003 were announced in late September by Workplace Relations and Safety Minister, the Hon Brooke van Velden. The Minister said the proposed new legislation will give more confidence and certainty to both employers and employees, and will fix the ‘broken system.’
Proposed key changes include:
- Hours-based accrual for sick and annual leave: replacing the current regime of those entitlements accruing in ‘days’ or ‘weeks’.
Pro rata sick leave: will be accrued from the first day of work, proportionate to hours worked; - Leave compensation payment for casual workers: they will generally receive an up-front payment of 12.5% for each hour worked, an increase on the current 8% pay-as-you-go regime
- Leave compensation payment for additional hours worked: hours worked above the hours will see a 12.5% upfront payment for each additional hour worked (except where those hours are compensated by salary), rather than accruing annual or sick leave on those additional hours;
- An ‘hourly leave pay rate’: will be used for all types of leave
- Family violence and bereavement leave: access to this special leave from the first day of employment and there is an ability to take part days of leave;
- An Ordinary Working Day (OWD) is more clearly defined: for workers without contracted days (or pattern) of work based on whether a worker worked on the day (the public holiday falls for 7 of the 13 preceding weeks;
- Returning from parental leave: new parents will receive full pay for annual leave when they return from parental leave, removing the current default position to pay the average hours worked in the preceding 12 months; and
- Mandatory pay statements: employers will be required to provide clear pay statements each pay period, and
- Cashing up annual leave: large annual leave balances will have more flexibility to cash up – up to 25% of total annual leave balance each year.
Submissions on the proposed changes will be further detailed in a draft bill due to be released in early 2026, before being considered by a select committee; opportunities will be available to provide input.
The changes will be included in the Employment Leave Bill; which proposed a 24 implementation period, after the bill is passed to allow a smooth transition for employers and payroll providers.
Until then, provisions in the current Holidays Act 2003 will apply.
