In 2018, the Government set up the Holidays Act Taskforce to look at ways to simplify the Holidays Act 2003 (the Act).
The Government has accepted the Taskforce’s 22 recommendations to amend the Act. The changes will provide clear and transparent rules for providing entitlements to, and payments for, holidays and leave.
The Government expects to have introduced legislation for these amendments by early 2022. The full report is available on MBIE’s website.
Highlights of the changes are listed below:
- The way annual holidays is paid has now been clarified and will be paid at the greatest of:
- Ordinary Leave Pay (what an employee would have earned if they had been at work on the days leave was taken)
- Average weekly earnings over last 13 weeks
- Average weekly earnings over last 52 weeks
- Employees returning from parental leave will now be paid at their full rate (as set out for annual holidays above).
- Family violence leave, bereavement leave, alternative holidays, public holidays and sick leave will be paid at the greatest of Ordinary Leave Pay or Average Daily Pay over the last 13 weeks.
- The term ‘gross earnings’ has been clarified to mean all cash payments received, except direct reimbursements for costs incurred. This clarifies what a discretionary payment is.
- One day’s sick leave will be available from day 1 of employment with an additional day per month of employment until the employee has met the full entitlement. The current Act requires an employee to be working for 6 months before they are entitled to sick leave.
- Employees will be able to take a minimum of ¼ of a day leave for sick leave and family violence leave.
- From their first day of employment, eligible employees will be entitled to bereavement leave and family violence leave. The current Act requires an employee to be working for 6 months before being eligible for bereavement leave and family violence leave.
- The entitlement to 3 days bereavement leave is extended to now cover more family members, such as stepfamily, whāngai relationships, and children-in-law. This takes into account a more modern understanding of family members.
- On the sale and transfer of a business, employees will be able to choose whether to transfer all of their leave entitlements to the new employer or have them paid out and reset.
- Employers will be required to provide pay slips to all employees in every pay period. The pay slips will include their current leave entitlements making it easier for employees to see the balance of their leave that is available to them.
- Employees will be able to take pro-rata annual leave in advance of reaching 12 months’ continuous employment.
- There has been a clearer definition of what ‘intermittent or irregular’ means for pay-as-you-go employees (PAYG). Employers will also be required to review PAYG employees every 13 weeks to check eligibility (PAYG does not apply to employees on fixed term contracts of less than 12 months).
The above amendments are not yet in force. Further information can be found on the MBIE website, under Holidays Act review.
If you have any questions regarding the changes to the Holidays Act, please contact one of the members of our employment team.