Early planning necessary to avoid unintended non-compliance in the future
Employers across New Zealand have been urged to plan ahead of the major overhaul coming to workplaces' leave system in a bid to avoid unintended non-compliance once the changes take effect.
The changes under the Employment Leave Bill will introduce substantial reforms to the way leave entitlements are earned, taken, and paid following complaints that the current Holidays Act 2003 is complex and confusing.
The bill passed the first reading in March, and is anticipated to be passed later this year.
A recent insight from law firm Dentons is urging employers to plan ahead of the changes despite a two-year transitional period once the bill passes.
"Although the new Bill will not take effect immediately, employers and payroll providers should begin considering its practical implications now," it said in the insight.
It advised employers to check whether existing employment agreements clearly describe standard hours to avoid the need for a notional roster.
It also suggested checking whether working arrangements are correctly categorised, and whether payroll systems can separately record and report on each category.
It also told employers to look into the cases of employees with multiple roles or agreements in their organisation, and whether these are also clearly documented and supported by payroll systems.
"Employers should also be aware that, while there will be three years to update current employment agreements to align with the new legislative framework, any terms that have not been brought into line by that deadline risk being overridden by the new statutory minimums," the law firm advised.
"Early planning is therefore likely to reduce time pressure later and help avoid unintended non-compliance once the new regime comes into force."
Employment Leave Bill
Under the Employment Leave Bill, annual and sick leave will accrue from day one in hours rather than being provided as annual entitlements.
There will also be a 12.5% upfront leave compensation payment in lieu of annual and sick leave accrual for all additional and casual hours.
The new framework for accruing and paying leave will be based on the introduction of three defined categories of working hours, called the Standard, Additional, and Casual hours.
Standard hours are the required hours that employees have to render work that employers pay for. These hours can be identified through three sources:
- The employment agreement
- A work roster
- A notional roster, which has to be agreed in writing and kept to date
"If enacted, this framework will make the drafting of hours and patterns of work in employment agreements important," the law firm said.
"Employers who fail to maintain accurate records risk having standard hours determined by a Labour Inspector. As such, categorising hours as standard, additional or casual in payroll systems will be essential to compliance."
