Retail NZ says members may not be able to absorb additional costs from proposed scheme
Retail NZ is calling on the government to lower the proposed Leave Compensation Payment (LCP) rate of 12.5%, calling it "insurmountable" for many small retailers in the country.
The LCP is an upfront payment in lieu of annual and sick leave accrual on all additional and casual hours under the proposed reforms in the Employment Leave Bill.
This means employees will be paid an extra 12.5% on top of their hourly rate for any additional or casual hours they work, instead of earning separate annual or sick leave on those extra hours.
But Retail NZ is asking the government to reduce the proposed LCP rate to reflect what would be accrued if an employee were earning annual and sick leave.
According to Retail NZ, many businesses may not have the capacity to absorb the additional costs stemming from the proposed rate.
"Our members have been very clear that this change could be insurmountable for many small retailers," said Carolyn Young, chief executive of Retail NZ, in a statement.
"After several years of challenging economic conditions, rising costs, and tight margins, many businesses simply do not have the capacity to absorb a significant increase in wage costs. For some employers, this 12.5% payment risks their viability and discourages flexible work arrangements."
Proposed Employment Leave Bill
Retail NZ aired its concerns on the LCP in its submission to the select committee, which is pooling feedback from employees and other parties on the Employment Leave Bill.
The proposed legislation seeks to replace New Zealand's Holidays Act 2003, which has been criticised for being "complex" and "confusing" for employers.
Under the bill, annual leave will shift to a standard hours-based calculation, and sick leave entitlements will be under a pro-rated system for part-time workers.
Young said Retail NZ members "strongly welcome the intention" behind the Bill and the improvements it makes to the Holidays Act.
"We support a leave system that is fair, transparent and workable for everyone," she said. "The core reforms in this Bill move us much closer to that goal, but it is vital the final legislation balances employee protections with the real operating conditions facing retailers."
