The Minister for Workplace Relations and Safety, the Hon. Brooke van Velden, announced on 23 September 2025 that the Holidays Act 2003 will be officially replaced with a new Employment Leave Act, following a Cabinet decision in August.
The new legislation aims to create a simpler, more workable employment leave system that provides clarity of both employers and employees, reduces compliance costs, and addresses long-standing problems identified within the current Act.
We're highlighting some of the changes being proposed under an Employment Leave Act, what this means for DSPs and the next steps for
introducing the legislation below.
Proposed Changes
The major changes being proposed under the new legislation include:
- Annual and sick leave will accrue continuously in hours from day one of employment, with leave able to be taken in hours
- Sick leave will be earned in proportion to contracted hours
- A 12.5% upfront leave compensation payment will be made for hours worked by casual employees and hours worked over and above contracted hours, instead of annual and sick leave accrual
- The same hourly leave pay rate will apply for all types of leave and will be based on worker's base wages on the day of leave
- Alternative holidays will also move to an hours-based accrual
- Public holiday entitlements will be based on a new, clearer test
- Clear pay statements must be provided for each pay period
Read more about the proposed changes in MBIE's explainer or factsheet.
What does this mean for DSPs?
While this announcement from the government provides an overview of the anticipated changes and highlights some of the expected impacts for payroll software providers, DSPs will need to wait for draft legislation to understand the full details.
However, the government has signalled that there will be a 24-month implementation window after the Bill is passed, allowing DSPs and
employers to make adjustments.
What are the next steps?
Once the legislation has been drafted and introduced, it will be considered by a Select Committee. At the Select Committee stage, there will be the opportunity for the public to provide input.
DSPANZ will be monitoring developments and providing updates as the legislation progresses. We'll also be working with our members to support giving feedback to the government and ensure that the relevant resources and materials are made available alongside the new legislation.
Read more about the Holidays Act reform on MBIE's
website.