Government unveils major reforms to employment leave system
Major reforms to employment leave schemes will be introduced in a new bill that will repeal the "broken" Holidays Act 2003.
Workplace Relations and Safety Minister Brooke van Velden announced on Tuesday the new Employment Leave Act, saying Cabinet has agreed to repeal and replace the Holidays Act.
"The Holidays Act will be repealed and replaced with a simpler, more workable alternative: what will be known as the Employment Leave Act," she said.
Changes to be introduced under the proposed legislation include a shift to hours-based accrual for sick and annual leave.
"From day one, employees will earn both annual and sick leave in direct proportion to their contracted hours of work," van Velden said.
"No more wrestling with weeks and days, adjusting balances when hours of work change, or trying to define what constitutes a 'working week' for a staff member with a variable schedule. It also means no more waiting for six months to access sick leave, or twelve months to access annual leave."
For casual employees, they will also see an increase to their pay by receiving an upfront payment of 12.5% for each hour worked instead of accruing annual and sick leave.
"The idea of stored annual and sick leave is difficult to apply to casual work, where there is no expectation of ongoing employment or fixed hours," van Velden said.
"With the shift to the Leave Compensation Payment system, casual workers will receive a four per cent pay increase to recognise leave entitlements."
More reforms to leave system
Other major reforms to the leave system include gaining access to bereavement leave and family violence leave from the first day of employment.
Parents will also receive full pay for annual leave when they return from parental leave, according to the reforms.
"This change removes a long-standing source of frustration and disadvantage for parents re-entering the workforce. It also avoids replicating the complex and confusing annual leave payment rules after parental leave," van Velden said.
Under the reforms, employers will also be mandated to provide clear pay statements each pay period. Workers will also get more flexibility to to cash up 25% of their total annual leave balance each year.
'Broken' Holidays Act
The changes come after van Velden unveiled last year her plans to reform the Holidays Act, citing issues with the law that have left the majority of employers non-compliant at some point in the past.
One of these employers is Health New Zealand, which is in the middle of repaying hundreds of thousands of employees after they were paid incorrectly because of Holidays Act non-compliance.
"The problems with the Act have been well canvassed over the years, costing billions in large-scale remediation payments," van Velden said.
"All workers, businesses, and their families will benefit from leave payments being simpler and more predictable, with greater transparency and certainty."
The legislation is currently being drafted, according to the minister. Once passed, there will be a 24-month implementation period to ensure a smooth transition for employers and payroll providers.
Business welcomes leave reforms
Meanwhile, employers across New Zealand welcomed the announced reforms to employment leave.
The Employers and Manufacturers Association (EMA) said the changes bring much-needed clarity and simplicity to leave entitlements.
"Employers and employees should be able to more easily understand and apply the rules and that's a win for everyone," said Alan McDonald, Head of Advocacy and Strategy at the EMA, in a statement.
"Overall, this is cost neutral for most employers, and the time saved from not having to navigate a convoluted system is a major win."
Business New Zealand chief executive Katherine Rich added that remedying the Holidays Act has been a "long time coming."
"Employers and employees are looking forward to simpler, more predictable leave provision in the future," Rich said in a statement.
