Readying your franchise business for changes

Employment Leave

While the universally unpopular Holidays Act 2003 is not being completely replaced by the new Employment Leave Act 2026 until August 2028, there are a number of provisions being introduced from 1 July 2027 onwards, such as changes to parental leave entitlements, required employee information disclosures and updated statutory definitions for ordinary weekly pay.  

Franchise businesses often operate with casual, part-time and variable-hour employees. To be best prepared for the more extensive changes coming in 2028, franchisors and franchisees who employ staff should start to familiarise themselves with the new rules, and begin conversations with payroll providers and accountants as early as possible. Payroll systems, employment agreements, rostering and leave calculations will all need attention over the next 20 months in preparation for the changes. A few examples that will affect franchise businesses include:

• For both part-time and full-time staff, annual leave and sick leave will accrue hourly from day one of employment, based on standard working hours. There will be no qualifying period before leave can be awarded and both annual and sick leave will be able to be taken and paid out in hours rather than full days.
• For anyone working casual or additional hours above their standard hours, a new 12.5% upfront leave compensation payment will apply, instead of the traditional leave accrual.
• Employees will be able to request to cash up to 25% of their total accumulated annual leave balance each year (currently limited to one week per entitlement year).

The overhaul is intended to fix decades of chronic calculation errors and administrative nightmares under the old Holidays Act, but don't jump the gun! Again, all employers are being warned to prepare for the changes, not to implement them in advance of the August 2028 date.  There is a helpful timeline for steps to take to prepare for the changes on the government's Employment New Zealand site.

Health & Safety reforms

The Health and Safety at Work Amendment Act 2026 comes into force on 1 April 2027, intending to improve the administrative burden on small businesses, but that doesn't mean franchisees and franchisors can breathe a sigh of relief and ignore H&S from now on!

All businesses will still need to identify the critical risks associated with their work and businesses with fewer than 20 workers will be required to prioritise managing critical risks (those most likely to cause serious harm, injury or death). 

That means you may not have to identify every opportunity for a paper cut in the office, but you do have to have a proper plan in place for more serious incidents and accidents waiting to happen.

The reforms create an opportunity for franchisors to review health and safety processes and ensure franchisees understand their responsibilities, especially in the most affected industry sectors such as hospitality, retail, cleaning, trades, construction, home services and childcare. Contracts for work in these sectors may rely on being up to date with your health and safety paperwork and practices.

Franchisees should not assume that their franchisors will sort that all out for them - it is your responsibility as the business owner to make sure you are compliant with the new legislation. 

The government is yet to provide detailed information about the specific changes, so it would be a good idea to keep an eye on their Worksafe site to stay ahead of any updates you may need to introduce to your business in the next few months. 

We'll also be publishing an article early in the new year drawing on expertise in this area to help identify what you need to look out for and how best to stay ahead of legislative changes.