More than 200,000 New Zealand workers could see their annual income reduced if proposed changes to employment leave laws become legislation, according to new analysis released by the Public Service Association Te Pūkenga Here Tikanga Mahi (PSA).
The warning comes after the Employment Leave Bill passed its second reading in Parliament this week, moving a step closer to becoming law.
The PSA says the legislation would change the way leave payments are calculated by excluding overtime, penal rates and other regular allowances from holiday and leave entitlements. For many workers who depend on these additional payments as part of their weekly income, the changes could amount to hundreds of dollars less each year.
Using data from Stats NZ, the union estimates that more than 200,000 workers across sectors including health, public services, retail, manufacturing and other industries would be financially affected.
The union argues the changes come at a time when many households are already under significant financial pressure from rising living costs.
Union Says Workers Will Lose Income
PSA National Secretary Fleur Fitzsimons says the legislation will reduce the income of workers who regularly work overtime, weekends or shifts that attract additional allowances.
The union says it presented evidence to Parliament’s select committee outlining the likely financial impact of the bill and facilitated meetings between affected workers and Government MPs during the legislative process.
According to the PSA, opposition parties including Labour, the Green Party and Te Pāti Māori committed to opposing any changes that would leave workers financially worse off, while Government parties have continued to support the legislation.
The PSA has also criticised New Zealand First’s support for the bill, arguing it is inconsistent with the party’s long-standing support for working people.
Government Says Bill Clarifies Leave Calculations
Workplace Relations and Safety Minister Brooke van Velden has previously said the Employment Leave Bill is designed to simplify New Zealand’s complex Holidays Act provisions, which have created compliance issues for employers and resulted in widespread payroll errors across both the public and private sectors.
Successive governments have acknowledged problems with the Holidays Act, with many organisations—including government departments, district health boards and councils—having paid millions of dollars in back pay after incorrectly calculating employee leave entitlements.
The Government says the reforms are intended to create a clearer and more workable system for employers while maintaining fairness for employees.
However, unions argue the proposed changes shift the financial burden of simplifying the law onto workers who rely on overtime and allowances as a normal part of their earnings.
Cost-of-Living Concerns
The debate comes as the cost of living remains one of the defining issues of the 2026 General Election campaign.
Many households continue to face higher housing costs, increased food prices, insurance premiums and other essential living expenses, placing additional pressure on family budgets.
For shift workers in hospitals, aged care facilities, emergency services, manufacturing plants and retail businesses, overtime and penal rates often form a significant proportion of their annual income.
The PSA says reducing those payments while employees are on annual leave, sick leave or other forms of paid leave risks placing further financial strain on working families.
Political Battle Ahead
With the bill continuing through Parliament, unions have signalled they will campaign against the legislation throughout the election period.
The PSA says it intends to raise public awareness of the bill’s potential impact, arguing that the proposed changes extend far beyond isolated cases.
The legislation is expected to remain a point of contention between the Government and opposition parties as Parliament approaches the final sitting weeks before the election.
If passed, the Employment Leave Bill would represent one of the most significant reforms to employment leave entitlements in recent years, with both supporters and opponents agreeing its effects will be felt across a broad cross-section of New Zealand’s workforce.
#RadioWaatea #WaateaNews #EmploymentLaw #PSA #WorkersRights #CostOfLiving #HolidayPay #EmploymentLeaveBill #Unions #PublicSector #Retail #HealthWorkers #TePātiMāori #Aotearoa #NZPolitics
