Reforms to 'complex' Holidays Act pass first reading
The bill aimed at replacing New Zealand's Holidays Act 2003 has passed first reading at Parliament, opening the legislation for feedback from employers and other interested parties.
Workplace Relations and Safety Minister Brooke van Velden announced the development on the Employment Leave Bill on Thursday.
"I am proud of the significant progress made already to have legislation ready and available for public feedback – a milestone successive Ministers tried but failed to reach," the minister said.
"I especially encourage people with technical expertise to make a submission and help ensure this legislation is workable for decades to come."
New Employment Leave Bill
The new Employment Leave Bill has been introduced as a replacement for the current Holidays Act 2003, which has earned a reputation for being "complex" and "confusing" among employers.
Confusion surrounding the Holidays Act has led to huge remediation costs for employers, including Health NZ, which is currently repaying thousands of current and former employees following compliance issues with the legislation.
"The Employment Leave Bill will bring simplicity and logic to the way employment leave is calculated, which benefits businesses by saving them time and money when calculating their payroll obligations, and prevents headaches for both employers and employees from getting payments wrong," Van Velden said.
"This Bill responds directly to what I've heard since coming into office: businesses are overwhelmed by compliance, and workers are missing out on entitlements."
Reforms introduced in the bill include a shift to standard hours-based calculation for annual leave entitlements, and a pro-rated system for sick leave entitlements for part-time workers.
"Businesses will benefit from the shift to hours-based accrual and pro-rata sick leave," Van Velden said.
"Workers will benefit from having access to leave entitlements from day one, increased upfront pay for many casual employees instead of accruing annual and sick leave, and full pay for annual leave when parents return from parental leave."
Paul Gillespie, Principal - Employment Lawyer at Ford Sumner Lawyers, said the introduction of the bill is a "significant and much-needed modernisation of New Zealand's leave framework."
"Importantly, the clearer statutory structure is expected to reduce the frequent compliance issues and inadvertent underpayments that have long-affected employers, providing greater certainty," Gillespie said in a statement quoted by Retail NZ.
Ashlea Maley, associate director - operations at Peninsula New Zealand welcomed the legislation as a step toward simplifying "complicated and often confusing" employment law.
“Once the Bill becomes law, businesses will have a two‑year implementation period. This is a valuable opportunity for small businesses to update their systems, understand the new entitlements, and ensure their payroll processes are set up correctly. Rather than seeing it as an administrative burden, employers are encouraged to take full advantage of this transition period to upskill themselves regarding their obligations and make adjustment to their payroll and compliance policies accordingly," said Maley.
“Overall, simplifying leave calculations and entitlements is a constructive move that will help businesses adapt more easily and reduce the red tape around business operations.”
Now open for submissions
The bill's passing on first reading opens it up for consultation for employers, unions, and other interested parties.
Retail NZ, in a statement, said it welcomes the development and looks forward to filing its recommendations.
"The proposed changes will make it fairer and more workable for both employers and employees," said Retail NZ chief executive Carolyn Young.
"We look forward to making recommendations around these provisions in our submission on behalf of New Zealand retailers."
The Employers and Manufacturers Association of New Zealand (EMA) also previously said they are encouraging their members to raise technical issues or suggest refinements in the proposed legislation.
"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," said Alan McDonald, Head of Advocacy and Strategy at the EMA, in a statement.
