The Government is introducing legislation to double sick leave to 10 days, but it comes with a catch: you won't be able to save up sick days more than you already can.

Labour promised to double sick leave during the election campaign and Prime Minister Jacinda Ardern promised to have the legislation ready before Christmas.

"It is important for us, particularly in this COVID environment, to make sure that people have access to adequate sick leave," she said earlier this month.

"As promised, we've introduced the Bill before Christmas and it will go through a full select committee process," Workplace Relations and Safety Minister Michael Wood said on Monday.

The Holidays (Increasing Sick Leave) Amendment Bill will mean more workers can stay at home if they're sick and more sick leave will help support working parents.

But the Government has decided not to allow the increased amount of sick days to be carried over more than the 20 days annually. 

"The Bill also keeps the current maximum entitlement of any unused sick leave at 20 days annually, which will help make it easier for businesses to implement," Wood said.

He said while around half of all employers provide the current minimum entitlement of five days, many employers offer 10 days or more already, and this will mean no change for them.

"But five days can be easily used up and employees who have used up their sick leave face a choice between working while sick or taking unpaid sick leave, which is not an option for many."

Employees will receive their increased entitlement depending on when they started, allowing businesses time to prepare, Wood explained.

The legislation is expected to pass in mid-2021 with any changes coming into force two months after it passing its third reading and is given Royal assent, meaning it becomes law.

"In this year of COVID, access to adequate sick leave has been brought to the fore and especially how important it is for people to be able to afford to stay home when they are sick. However, our current leave rules and entitlements were not designed for extraordinary situations such as a pandemic," Ardern said on Monday.

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The Government has had to step in to fill the immediate void with the COVID leave support scheme which ensures those who have had a COVID-19 test and need to self-isolate can still get paid.

It was called the 'COVID-19 Essential Workers Leave Support' because it was only available to essential businesses. The name was changed because it's now available for all employers who meet the criteria.

The rate is the same as the wage subsidy scheme, $585.80 for full-time workers and $350 for part-time workers.

"We need a more enduring response and one that also recognises the benefits to business and families of better entitlements," Ardern said.

Respondents to the 2015 American Working Conditions Survey who reported working while sick estimated that this this reduced their productivity by around 20 percent on average, and an Australian study has found the healthiest workers are up to three times more productive.

The change will bring New Zealand in line with Australia.

It comes after controversy surrounding an Auckland retail worker who tested positive for COVID-19 earlier this month and went into work despite showing symptoms of the virus.

Green Party workplace relations spokesperson Jan Logie said the case of the Auckland city worker heading to work with COVID-19 symptoms showed the need for urgent extended sick leave.

"What has become abundantly clear during the COVID-19 pandemic is that five days of sick leave annually just doesn't cut it," she said at the time.

"The difference between five and 10 days off could be the difference between increased community transmission of COVID-19 or not."

ACT leader David Seymour says Labour's decision to double sick leave "shows it is using COVID-19 as an excuse to advance a left-wing agenda and help its union mates".

"New Zealand is in recession, and the recovery will be long and fragile, but Labour keeps piling on new costs and red tape."

ACT wants to put a three-year moratorium on raising the minimum wage, reinstate 90-day trials for all businesses, and cut GST to 10 percent for 12 months.

Retail NZ chief executive Greg Harford fears the increased sick leave will put off businesses from hiring part-time workers.

"For employees who work one day a week, a 10 day sick leave entitlement is equivalent to 20 per cent of a working year. This is a significant cost to employers and ultimately will discourage businesses from offering part-time work to those who want it."