In 2018, the Government established the Holidays Act Taskforce to review and suggest amendments to the Holidays Act 2003. In October 2019, the Taskforce issued its report, and the Government announced in February 2021 that it has accepted all 22 recommendations made by the Taskforce.
In theory, the recommendations are aimed at providing greater clarity and certainty for employees and employers regarding their rights and obligations under the Act. They also include recommended changes to leave entitlements and definitions and methods for calculating payments for holidays and leave.
Some notable recommendations by the Taskforce include:
- Annual holidays being paid as the greater of ordinary leave pay and average weekly earnings over the last 13 weeks and 52 weeks, including for employees who have been on parental leave;
- Entitlement to family violence, bereavement leave would be available from the first day of work;
- Entitlement to sick leave would gradually be available from the first day;
- Family violence, bereavement, alternative days, public holidays and sick leave being paid at the greater of ordinary leave pay and average daily pay over the last 13 weeks; and
- Employees will have a choice between transferring their leave entitlements or having it paid out and reset upon the sale or transfer of a business.
For more information on the Taskforce recommendations, please see our earlier article here (https://jennifermills.co.nz/stop-press-holidays-act-taskforce-report-released/).
Digitising the Holidays Act?
MBIE has announced that it is undertaking the policy design work by using its ‘Better Rules’ approach, which is a Government initiative aimed at enhancing the policy-development process.
This approach is aimed to produce legislation that will enable people and employers to better access and comply with laws and regulations through devices and business software. This is in response to an increasing shift towards the use of digital technologies and software in the way we interact with legislation and the Government. In practice, it means developing legislation that can be operationalised in digital payroll systems.
There is still considerable work on legislative design and development. As such, a Bill is not expected to be introduced into Parliament until early 2022. It also appears that the general public will not be able to make submissions until the Bill is introduced to Parliament and has reached the select committee stage.
Once the parliamentary process is complete and a Bill is enacted, there will be a transition phase before the Bill comes into force. MBIE has indicated that the earliest the changes will come into force is in mid-2023. Until then, all existing rules under the Holidays Act will continue to apply, and employers are still under the obligation to remediate underpayments (if any).
If you need advice or assistance in relation to your payroll practices, we encourage you to contact us.