Changes to New Zealand’s Holiday Act 2003

This year, we will see significant changes being made to New Zealand’s Holiday Act 2003. Late last year, the Government introduced the Holidays (Increasing Sick Leave) Amendment Bill 2020 , which is set to increase the minimum employee sick leave entitlement from five days per year to 10 days per year. The Bill is currently undergoing second reading in Parliament and is expected to pass as legislation.


In addition to this, the Holidays Act Taskforce has put forward further changes to the Act that the Government advised they will accept in full. These include:

  • Entitling eligible employees to bereavement leave and family violence leave from the first day of employment;

  • Giving eligible employees one day’s sick leave from their first day of employment, with an additional day given per month until the minimum is reached;

  • Extending bereavement leave to include more family members, including cultural family groups and more modern family structures;

  • Removing the current parental leave ‘override’ to address discrimination against parents who take time off to care for young children. Removing this provision will mean that employees returning to work following parental leave will be paid at their full rate for annual holidays; and

  • Requiring payslips, so employees know what their used and remaining leave entitlements are, and how these were calculated.


The Minister for Workplace Relations and Safety, the Hon Michael Wood has outlined that he expects to introduce the legislation for the additional changes in early 2022, giving business plenty of time to prepare for the changes.


Market Feedback

Matthew Greenwood, Principal Consultant of Archway Recruitment, as a recruiter of Payroll, has been gathering feedback from the reception the market has had to these announcements and shares his thoughts here.


“The proposed changes to the Holidays Act have so far been met to a lukewarm response from professionals in the industry. Whilst it does address some of the compliance issues and some of the changes to sick/bereavement leave and carry over of leave (in the case of a change/transfer of business) are being warmly welcomed, most seem to see it as a missed opportunity, either because it doesn’t tackle issues fully or formalise employers’ entitlements to accessibility of sick, bereavement, leave in advance etc.


Regarding the Holidays Act compliance, many feel that the fundamental compliance issues and especially the retention of leave being calculated in ‘weeks’ is seen to be an incredible oversight. I am told that the leave calculations in weeks may be particularly challenging for employers who have employees who have adopted 9-day fortnights, or in fact any variable work pattern. Many have said that whilst these changes were also supposed to streamline leave payment calculations, the four formulae approach which is being recommended is overly complex and increases the burden on the payroll team. It is worth pointing out that the payroll working group engaged for this process had raised concerns that these issues weren’t being addressed. So the fact that they weren’t is noteworthy.


Some employers have also indicated concern that they feel that the negotiated Act is configured in such a way that those that have the best conditions through the 2003 Act are not in a worse position than previously, and therefore most people will have a considerably improved set of conditions to be in line with them, with associated costs carried on to the employer. Also, the removal of the wording of “gross earnings” to “all cash payments received, except direct reimbursements for costs incurred” is considered to be particular of concern and may have significant ramifications on the employer. Depending on the employers’ appetite for these additional costs there is a worry that this may have detrimental impacts on their employees or consumers of their products/services.”


Ongoing Discussions

It’s this appetite (or lack of it) for additional costs which could see an increased demand for on-hire recruitment services and flexible staffing solutions as organisations grapple with an increasing demand for flexible working from employees combined with increasing compliance costs and complexity.


At the same time, it poses a challenge for recruitment firms in calculating and modelling their operational costs and margins as you also need to consider how many of your long term placements are likely to be still working when the legislation is expected to be in force as they will immediately qualify for additional sick leave.


Whether recruitment firms enter or exit temp staffing as a result of this is too early to tell.


The RCSA is interested in your view as to what these changes will mean for you.


This will be a key topic of conversation at our NZ Business Leaders’ Roundtable. Please send any questions to advocacy@rcsa.com.au.

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