New Zealand construction operates under the Holidays Act 2003 without industry-specific awards — the Act and individual or collective employment agreements set the framework for all leave entitlements. Construction’s project-based work model, weather-related disruptions, and reliance on casual and contract labour create leave management challenges that go beyond what the Holidays Act surface provisions suggest.

This guide covers leave management for New Zealand construction businesses: entitlements under the Holidays Act, how to manage project-based leave, weather stand-downs, and the compliance mistakes most common in the sector.

Key takeaways

  • All New Zealand construction employees accrue 4 weeks annual leave after 12 months of continuous employment, accruing progressively from day one.
  • Annual leave must be paid at the greater of Ordinary Weekly Pay (OWP) or Average Weekly Earnings (AWE) — construction workers with variable earnings often receive more during leave.
  • Employees who work on a public holiday receive time-and-a-half plus an alternative holiday (day in lieu).
  • Construction’s project-based work means leave management must account for project closures, weather stand-downs, and worker transitions between projects.
  • Casual construction employees receive 8% holiday pay (or the new 12.5% LCP under the proposed Employment Leave Bill 2026).

Leave entitlements under the Holidays Act

The Holidays Act 2003 applies to all construction employees regardless of classification:

Leave type Entitlement Qualifying period Payment
Annual holidays 4 weeks per year 12 months (accrues from day one) Greater of OWP or AWE
Sick leave 10 days per year 6 months continuous employment Daily pay or average daily pay
Bereavement leave 3 days (immediate family) or 1 day (others) 6 months continuous employment Daily pay or average daily pay
Family violence leave 10 days per year 6 months continuous employment Daily pay or average daily pay
Public holidays 11 national + regional anniversary From day one Time-and-a-half + alternative holiday if working

Annual leave and the “greater of” rule

Construction workers with variable earnings — particularly those working overtime, weekend shifts, or across multiple projects — are significantly affected by the “greater of” rule.

Worked example: construction leave pay

A builder earns $1,100/week in ordinary hours but regularly works overtime on site, averaging $1,350/week over the past 12 months.

Calculation Amount
OWP $1,100/week
AWE ($1,350 × 52 / 52) $1,350/week
Employee receives $1,350/week (the greater amount)

This means the builder is paid 23% more during annual leave than their normal weekly pay.

Managing project-based leave

Construction’s project-based work model creates unique leave management scenarios:

Project closures and gaps

When a project ends and there is no immediate next project, the employer must manage the transition carefully:

  • Annual leave: The employer can request or require the employee to take annual leave during a project gap, subject to the Holidays Act’s requirements
  • Stand-down: If the employee cannot be usefully employed due to circumstances beyond the employer’s control (for example, no work is available), the employer may stand them down — but annual leave does not accrue during a stand-down unless the employment agreement provides otherwise
  • Redundancy: If no work is available and the employment relationship cannot continue, the employer may need to consider redundancy

Construction work is frequently affected by weather. The Holidays Act does not specifically address weather stand-downs, but the general principles apply:

  • If the employee cannot be usefully employed due to severe weather, the employer may stand them down without pay
  • During a weather stand-down, annual leave does not accrue (unless the employment agreement provides otherwise)
  • The employer can require the employee to take annual leave during a weather stand-down if the employment agreement permits it
  • ACC may apply if the employee is injured on site due to weather-related incidents

Moving between projects

An employee moving between projects within the same employer has continuous service. Their leave balance carries over, and annual leave continues to accrue based on ordinary hours.

Key tracking point: If an employee’s ordinary hours change when moving between projects (for example, from a 40-hour week to a 36-hour week), the annual leave accrual must be recalculated from the date of the change.

Public holidays on construction sites

Construction sites may or may not operate on public holidays — depending on the project timeline and the employer’s decision to work or shut down.

If the site operates on a public holiday and the employee works:

  • Time-and-a-half for hours worked
  • An alternative holiday (paid day off later)

If the site shuts down on a public holiday that falls on a day the employee would normally work:

  • Normal pay for the day

If the public holiday falls on a day the employee would not normally work:

  • No payment is due

Alternative holidays carry forward indefinitely. An employee who works on 3 public holidays earns 3 alternative holidays — these must be provided on request and do not expire.

Managing casual and contract workers

Construction relies heavily on casual and contract labour. Under the Holidays Act, casual employees who work irregular or intermittent hours receive an 8% holiday pay payment instead of accruing annual leave.

Proposed changes: Employment Leave Bill 2026

The Employment Leave Bill 2026 replaces the 8% payment with a 12.5% Leave Compensation Payment (LCP) and introduces leave accrual from day one for casual workers.

What this means for construction:

Entitlement Current law Employment Leave Bill 2026
Annual leave 8% holiday pay Accrues from day one (0.0769 hrs/hr worked) + 12.5% LCP
Sick leave After 6 months From day one (0.0385 hrs/hr worked)
Bereavement leave After 6 months From day one
Family violence leave After 6 months From day one

Construction impact: Under the new Bill, casual construction workers begin accruing leave from their first day. This means employers must track leave accrual for casual workers — a significant administrative change for an industry that relies heavily on casual labour.

Common compliance mistakes in NZ construction

1. Incorrect OWP/AWE calculations

Construction workers with variable earnings are particularly affected by the “greater of” rule. Failing to base the AWE calculation on actual gross earnings creates systematic underpayment.

2. Not providing alternative holidays

When employees work on public holidays, they are entitled to alternative holidays. Failing to track and provide them creates a personal grievance risk.

3. Standing down employees without following the law

A stand-down must meet specific criteria — the employee cannot be usefully employed due to circumstances beyond the employer’s control. A stand-down for convenience (for example, during a slow period) is not permissible without the employee’s agreement.

4. Not paying out leave on termination

All accrued but unused annual leave must be paid out on termination. For construction workers who move between projects or employers frequently, this obligation is triggered regularly.

5. Misclassifying employees as contractors

If a worker is reclassified from contractor to employee — for example, after a long engagement — they are entitled to back-accrued leave from the start of the engagement. The Holidays Act looks at the substance of the arrangement, not the label.

Practical steps for NZ construction employers

  1. Calculate OWP and AWE per employee for each leave period — use the greater of the two.
  2. Track alternative holidays as they accrue — they do not expire and must be provided.
  3. Manage project transitions carefully — document stand-downs, leave directions, and service continuity.
  4. Review casual worker arrangements — ensure the 8% payment (or LCP under the new Bill) is correctly applied.
  5. Document weather stand-downs — record the reason, duration, and whether annual leave was taken.
  6. Keep records for 6 years — the Holidays Act requires employers to maintain accurate leave records.

For more on NZ leave law, see our guide to the Holidays Act in New Zealand, calculating leave pay (OWP vs AWE), and public holidays in NZ.

Frequently asked questions

How much annual leave do construction workers get in NZ?

All employees accrue 4 weeks of annual leave after 12 months of continuous employment, accruing progressively from day one. Payment is at the greater of Ordinary Weekly Pay or Average Weekly Earnings.

Can a construction employer stand down employees during weather delays?

Yes, if the employee cannot be usefully employed due to circumstances beyond the employer’s control. During a stand-down, annual leave does not accrue unless the employment agreement provides otherwise. The employer can require the employee to take annual leave during the stand-down if the agreement permits it.

Do casual construction workers get annual leave?

Under current law, casual employees receive 8% holiday pay instead of accruing annual leave. Under the proposed Employment Leave Bill 2026, this will change to a 12.5% Leave Compensation Payment and casual employees will begin accruing leave from day one.

What happens to leave when a construction project ends?

Annual leave balances carry over when an employee moves between projects within the same employer. If the employment relationship ends, all accrued but unused annual leave must be paid out.

How many public holidays do construction workers get?

All employees are entitled to 11 national public holidays plus regional anniversary days. If they work on a public holiday, they receive time-and-a-half and an alternative holiday.

Sources

This article is general information, not legal advice. Confirm entitlements with Employment New Zealand and the applicable Holidays Act provisions.

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