We have known for a while now that 2021 would see shifts in New Zealand’s employment legislation, in particular the Holidays Act 2003. This Act has been challenging (to say the least!) for employers for a long time, so we were excited when the recommendations made by the Government’s Holidays Act taskforce were announced in February.
The Minister for Workplace Relations recently confirmed that all the taskforce’s recommendations will be accepted. This hasn't resulted in changes to legislation or employee entitlements just yet, but it’s worth spending some time familiarising yourself with some of the more significant changes we are expecting to see and what they may mean for your organisation.
In this article, we will cover:
- a brief overview of the more significant changes we are expecting to see;
- what these will mean for employers and employees; and
- what you can do to prepare for the changes.
Expected changes to the Holidays Act 2003
Some of the more significant changes we are expecting to see from the revamp of the Holiday Act 2003 include:
- Increasing paid sick leave entitlements from 5 days per year to 10 days per year.
- Removing the six-month waiting period for sick leave. Instead, employees will be entitled to 1 day’s sick leave from their first day of employment, with an additional day given per month until the minimum entitlement is reached.
- Allowing sick leave to be taken in increments of less than one day. The minimum amount of sick leave an employee can take will be a quarter of a day.
Bereavement leave and domestic violence leave:
- Extending bereavement leave to include parents who have experienced a miscarriage or stillbirth (3 days) and more family members, including cultural family groups and more modern family structures.
- Removing the six-month waiting period for bereavement leave (and domestic violence leave).
- Removing the 12-month waiting period for annual leave. Instead, employees will be able to take annual leave in their first year of employment (up to the amount they would be eligible for on a pro rata basis).
- A new calculation for the pay employees receive while on annual leave – paying the greater of: the usual pay they would have received if they had been at work, OR an average amount calculated over the either the last 13 or 52 weeks.
- Employees who return to work after a period of parental leave will be paid at their full rate for annual leave (currently they are paid an average of their earnings over the last 52 weeks which means these employees receive little pay for annual leave until they have been back at work for several months).
- Requiring payslips so employees know what their used and remaining leave entitlements are, and how these were calculated.
You can read the taskforce’s full report here: https://www.mbie.govt.nz/assets/holidays-act-taskforce-final-report.pdf
Legislation is expected to be introduced in early 2022.
Are these changes good news?
It’s clear that these changes are great news for employees. For employers, there seems to be mixed feelings. Unfortunately, the recommendations don’t seem to fully address one of the most difficult aspects of the Holidays Act – the lack of clarity around how holiday and leave payments are calculated. We also know 2020 was an extremely challenging year for New Zealand businesses and introducing changes that could increase costs for employers might seem like bad timing.
In particular, the news of increased sick leave has worried some employers and we understand why.