HOLIDAYS ACT CHANGES – WHAT YOU NEED TO KNOW

Hamish Kynaston, Partner, Buddle Findlay, shares insights into the new employer obligations and employee entitlements under the Holidays Act 2003.

There is a range of minimum standards that are applicable to all workplaces where there are employees and entitlements under the Holidays Act 2003 form one part of those minimum standards. The Holidays Act 2003 is one of the most difficult pieces of legislation to apply in the workplace, especially for employees with variable pay. It has been amended more than 20 times – but difficulties always remained. Many employers and payroll systems, historically, failed to properly and correctly understand and apply the Holidays Act, leaving many employers in remediation mode – often at a significant cost.

In 2018, the New Zealand government established the Holidays Act Taskforce to review and suggest amendments to the Holidays Act 2003. The taskforce was comprised of employer, worker and government representatives and the aim was to make the Holidays Act clearer, easier to comply with, and to provide greater certainty for employers and employees.

Hamish Kynaston

The Taskforce made several recommendations, all of which were accepted in February 2021 and the introduction of new legislation that brings the Taskforce's recommendations into effect will come into effect this year.

The new provisions will cover:

• New methodologies for calculating holiday pay and various leave entitlement payments.

• The ability of employees to take annual holidays in advance on a pro-rata basis.

• A formula for determining whether or not a day is an 'otherwise working day' for the purposes of sick, alternative, bereavement and family violence leave, and public holidays.

• An entitlement to family violence leave and bereavement leave from the outset of employees' employment.

• An entitlement to one day's sick leave from the outset of employment, with an additional day per month of employment until the entitlement is reached.

• A clear definition of what 'intermittent or irregular' means for the purpose of calculating and paying holiday pay 'as you go' for 'casual' employees.

In an ideal world, entitlements to paid holidays and other forms of paid leave would be easy to understand and easy to calculate. It remains to be seen whether or not the government is able to produce new legislation, which is at once certain, easily comprehensible, and simple to apply.

In the meantime, we recommend employers review their practices and payroll systems, and do their best to understand the obligations and entitlements and comply with those accordingly – and take advice as needed of course. Also, employers should take note of recent amendments which include an increased sick leave entitlement (from five to 10 days per 12 months) and an entitlement to bereavement leave for miscarriages and still births. ■

For more information on the changes to the Holidays Act 2003, visit www.mbie.govt.nz/business-andemployment/employment-and-skills/ employment-legislation-reviews/holidaysact-review/