Employers encouraged to file submissions to improve proposed legislation
The Employers and Manufacturers Association of New Zealand (EMA) has welcomed the introduction of the Employment Leave Bill to Parliament, calling it a meaningful step to fix the Holidays Act.
Alan McDonald, Head of Advocacy and Strategy at the EMA, said it is encouraging to see the reform progressing after previous failed attempts.
"Successive governments have acknowledged the problems, but this is the first time in years we've seen meaningful progress," McDonald said.
"It's good to see the reforms maintaining momentum as this overhaul has been needed for a very long time."
Under the proposed bill, annual leave will shift to a standard hours-based calculation, while sick leave entitlements will be under a pro-rated system for part-time workers.
"It significantly simplifies the system for both employers and employees, which is what everyone has been asking for," McDonald said.
But the EMA official also pointed out that the bill will introduce new systems that will require further attention from employers.
"There's still a bit for employers to get their heads around, particularly how standard hours apply to existing arrangements and how employment contracts may need to be updated," he said.
The new Leave Compensation Payment, where casual employees will see an increase in their pay by receiving an upfront payment for each hour worked, will also be another concept that employers need to manage, according to McDonald.
Sensible transition window
The bill, once passed into law, will have a 24-month implementation period to allow for a smooth transition for employers and payroll providers.
McDonald said the implementation window is sensible, and will give employers time to adjust to the new system, rewrite contracts, and work through transition issues.
"There are questions that need more clarity as implementation approaches," he said.
"In particular, how existing leave balances will be treated, how built-up entitlements will roll over to the new system, and how the rules apply to people with variable or commission-based earnings. Those transition details matter, and employers and employees need certainty on how to manage those changes."
The new Employment Leave Bill will receive submissions after it passes its first reading.
Employers should take this opportunity to raise technical issues or suggest refinements, according to McDonald.
"This is the moment to make improvements. The next few weeks will be important, and we'll be urging our members to submit in support of the Bill," he said.
Reforming the Holidays Act
The bill is expected to fix the country's Holidays Act, which has long been criticised for its complexity and long-standing issues with calculating leave entitlements and payments.
Among the victims of these challenges is Health NZ, which is currently carrying out a Holidays Act Remediation programme to fix compliance issues for current and former staff.
Workplace Relations and Safety Minister Brooke van Velden said last year that the Employment Leave Act will give employers the confidence and certainty they need.
"We're committed to fixing what matters, in this case we're taking care of a broken system that has been too complicated for businesses and workers to navigate effectively," van Velden said last year.
