Your leave report is the cheapest early warning system your business owns.
Most owners open it once a year, wince at the number that will be on the balance sheet, and close it again. Here is how to read it and get value from it, and why it matters more this summer than last.
Miners used to take a canary underground. When the bird went quiet, you got out. You did not wait for proof.
Your leave report works the same way. It goes quiet before your people do. Long before someone hands in a resignation, takes six weeks off, or makes the mistake that costs you a customer, the pattern is sitting there in payroll:
📈 Rising balances
🔄 Leave booked and cancelled
📅 Single sick days clustering in the same weeks every year
The report is not an accounting chore. It is a read on the health of your team, and it is free.
Four signals worth looking for
1. Big balances that keep growing
Anyone sitting well above four weeks accrued, with no plan to use it, is both a financial liability and a fatigue risk. The two usually arrive together.
2. The person who never books anything
Often your most capable operator. Often the one who believes the place falls over without them.
That belief is worth testing before circumstances test it for you.
3. Single days scattered through the calendar
One-off sick days that cluster around Mondays, Fridays, or the tail end of a hard project are worth a conversation. Not an accusation.
4. Leave booked and then cancelled repeatedly
This is the loudest signal on the list and the easiest to miss, because on paper nothing happened.
None of these prove anything on their own. They tell you where to look and who to talk to. That is the whole point.
Why those signals matter
1. That balance is real money, and the rules change in 2028
Unused annual leave sits on your books as a liability, and it gets more expensive over time.
Annual leave is paid at the rate applying when the leave is taken, not when it was earned. Every pay rise you give quietly revalues every day of leave your team is holding.
Under the current rules, annual leave is paid at the greater of ordinary weekly pay at the start of the holiday, or average weekly earnings over the previous 12 months.
This is where commission and bonus earners catch people out.
Average weekly earnings are based on gross earnings, and gross earnings include commission and productivity or incentive-based payments. So, if you have a salesperson on a modest base with a strong commission year behind them, their leave is worth considerably more than their base rate suggests.
Payroll may be showing you a number that understates what that balance will cost when it falls due.
Genuinely discretionary payments you are not contractually bound to make are treated differently, so whether the bonus is written into the employment agreement matters.
Put plainly: your most expensive leave liability is often held by your highest-performing, most heavily incentivised people, and it is growing every time they have a good quarter.
What is changing
The Employment Leave Act 2026 received Royal assent on 6 August 2026 and replaces the Holidays Act 2003 from 6 August 2028.
Leave will be earned in hours from day one rather than in weeks after 12 months, leave payments will move to hourly calculations, and existing balances will need to be converted.
Until August 2028, the Holidays Act applies in full.
Expect the next two years to be busier than the last two. Leave is in the news, payroll providers are writing to their clients about it, and people talk.
A reasonable expectation is more questions, more requests to take leave, and more interest in cashing up while the current rules still apply.
That is not a bad thing. It is the drawdown you have been hoping for, arriving all at once. But it lands on your cash flow and your roster, so plan for it rather than being surprised by it.
Cashing up: what you can and cannot do
Right now, an employee can request in writing to have up to one week of annual leave paid out, once per entitlement year.
It has to be leave they are already entitled to, not leave that is still accruing. You can say no, and you do not have to give a reason, but you must consider the request properly and reply in writing.
Two things follow from that.
First, cashing up will not clear a big balance under the current Holidays Act. One week a year does not touch someone sitting on eight weeks of leave.
Until 2028, the only real way a large balance comes down is by someone taking the time off.
Second, and this is the trap, you cannot initiate it.
An employer must not require an employee to make a cash-up request or unduly influence them into one. There are penalties for doing so.
Ringing your top commission earner to suggest they cash up a week before the rules change is exactly the conversation you should not have.
What you can do is make sure everyone knows how the process works in general terms, through a policy or team update rather than a targeted approach. If a request comes to you, handle it properly and in writing.
Keep the purpose in view. Cashing up moves a number off your balance sheet. It does nothing for the tired person who generated it.
If your leave report is telling you someone is running on empty, a payment is not the answer. Time off is.
2. Burnout costs you before it costs them
Around 57% of the New Zealand workforce sat in the high burnout risk category in the most recent wave of Professor Jarrod Haar’s wellbeing@work research at Massey Business School in April 2024.
That is more than one in two people.
A 2026 workforce health survey found 40% of New Zealand workers had experienced anxiety in the past year and 25% had experienced depression.
Here is the part that should get a business leader’s attention.
Professor Haar’s research also found that workers in the high burnout risk category were around 16 times more likely to be seriously considering quitting, and markedly more likely to disengage from their work.
Replacing a good person costs you recruitment fees, three months of reduced output, and the institutional knowledge that walks out the door.
A fortnight of annual leave costs you a fortnight of cover.
The maths makes the priority clear: protect and retain your good people.
3. Fatigue is a hazard, and hazards are your legal duty
Under the Health and Safety at Work Act 2015, you must manage work-related health and safety risks so far as is reasonably practicable.
Fatigue is a recognised workplace risk because it reduces alertness, increases errors, and impairs judgement and decision-making.
In trades, transport, healthcare, and any role involving machinery, driving, or high-stakes decisions, that risk can affect the worker, their colleagues, customers, and the wider business.
If someone near the top of your leave report also operates a vehicle or plant, makes safety-critical calls, or carries significant decision-making responsibility, these are not separate issues.
They are one combined risk that needs your attention.
4. Leave culture is a recruitment advantage you are already paying for
You are already funding four weeks of annual leave per person. You may as well get the retention benefit from it.
Candidates ask about workload and time off, and they may ask people who already work for you.
A team that visibly takes its leave is a reference you cannot fake and cannot buy.
5. Rest is a performance input, not a reward for good behaviour
The evidence points one way, and it is not new either.
Stanford research reported in 2015 on working hours found that output falls away sharply once people push past about 50 hours a week.
The extra hours stop producing extra results, and past a point they produce less.
Now connect that to Professor Haar’s findings above: high burnout risk drives disengagement and, eventually, people quitting.
Tired people are not more productive. They are more depleted, more prone to mistakes, and more likely to leave.
People who genuinely disconnect come back better at solving problems, not just happier.
Sustained high performance depends on recovery in the same way physical training does. Nobody thinks an athlete gets faster by never resting.
The same logic applies to the person doing your quotes.
What to do this week
- Pull the leave liability report. If you do not know how, your payroll provider will show you in ten minutes.
- Sort it by balance, highest first. Look at the top three names.
- Have three conversations. Not a group email. Have specific conversations with the three people carrying the most leave. Ask what their plan is and what would need to be true for them to take it.
- Diary your summer arrangements now. If you close down over Christmas, employees need at least 14 days’ written notice of the close-down period.
- Know that you can direct leave. Where you and an employee cannot agree on timing, you can require annual holidays to be taken, provided you have made a genuine attempt to reach an agreement and give at least 14 days’ notice. Use it rarely. Know it exists.
The bottom line
Your leave report will tell you what is coming, months before your people will.
It costs nothing to read and about an hour to act on.
Do not wait for the canary to stop singing.
Sorting out leave balances, close-downs and the shift to the Employment Leave Act is exactly the kind of thing we strategically untangle with leaders and HR professionals.
Book a free 15-minute conversation with Better HR Co. and we will tell you what we would do in your shoes.
This is general information, not legal advice.
What’s changed in this update
This article was first published in November 2024 and updated in September 2026.
We have refreshed it to reflect the Employment Leave Act 2026, which replaces the Holidays Act 2003 from August 2028, and updated the burnout and workforce wellbeing statistics to the most recent New Zealand research available.
