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Sick leave increasing to 10 days – are you ready for the change?

July 21, 2021

Source: Employment New Zealand

The minimum sick leave entitlement is increasing from 5 to 10 days per year from 24 July 2021. Employees will get the extra five days at their next entitlement date.

Employers and employees, it is important you are prepared for the change so you don’t get caught out. Here are six key things you need to know.

What is changing?

Employees currently (before 24 July 2021) get a minimum of 5 days’ sick leave per year after their first 6 months service (their first entitlement date) when meeting the eligibility criteria, and then 5 days per year on each following 12-month anniversary of that date.

The Holidays (Increasing Sick Leave) Amendment Act 2021 comes into effect on 24 July 2021. The Act increases minimum sick leave entitlements from 5 to 10 days per year.

Other key aspects of minimum sick leave rights remain the same:

Employees can still accumulate up to 20 days of unused sick leave. This means employees can now carry over up to 10 days of unused sick leave each year instead of 15.
The employer and employee can agree to more sick leave rights than the legal minimums. For example, give unlimited sick leave, or the option to accrue all unused sick leave.
Employees who have already agreed to 10 or more days of sick leave per year in their employment agreement will see no change.

When do employees get the 10 days per year sick leave?

Employees get the extra 5 sick days based on their next entitlement date that occurs on or after 24 July 2021. An employee’s entitlement date will be either after reaching 6 months employment, or on their sick leave entitlement anniversary. A sick leave anniversary is the date 12 months after an employee was last entitled to sick leave.

Examples

Mira started her job with an IT company in Hamilton on 31 January 2021. She is first entitled to sick leave on 31 July 2021 (6 months after she started). As her first entitlement date falls after the legislation change comes into effect, Mira gets 10 days’ sick leave from 31 July 2021. Mira is entitled to another 10 days’ sick leave on 31 July 2022. Unless agreed with her employer, Mira still won’t be able to accrue more than 20 days sick leave.

Elvis works for a small furniture store in Dunedin. He has worked for the same company for a few years and is currently entitled to 5 days’ sick leave per year. Elvis was last entitled to sick leave on 20 December 2020, and his next entitlement date will be 20 December 2021, which is after the legislation change comes into effect. From 20 December 2021, Elvis will get 10 days’ sick leave per year. Unless agreed with his employer, Elvis still won’t be able to accrue more than 20 days’ sick leave.

Aroha works for a bank in Auckland. She has worked for the same bank for over 10 years. Aroha was last entitled to 5 days’ sick leave on 23 July 2020 and her next entitlement date is 23 July 2021, before the legislation change comes into effect on 24 July 2021. This means Aroha has to wait until her following sick leave entitlement anniversary on 23 July 2022 to get 10 days’ sick leave per year. Unless agreed with her employer, Aroha still won’t be able to accrue more than 20 days sick leave.

How do employers need to prepare for the change?

Employers need to ensure that their systems and processes are updated in time for the change. This includes:

Ensuring payroll systems have been updated to reflect the increase in sick leave.
If you are employing new staff or creating new employment agreements (contracts), make sure that sick leave entitlements are noted at 10 days. You can use our Employment Agreement Builder to help create new legal employment agreements.
If your existing staff do not have an employment agreement, now is the time to create one and make sure that every employee has a legal employment agreement.
Being aware of the changes and communicating with affected employees about what the change means for them.
Updating employment agreements via a written variation letter to align with employees’ new sick leave entitlements where necessary. The new minimum entitlements will apply whether or not an employment agreement is updated.
If you are planning to add any other variations to the employment agreement (contract), make sure that you discuss this with employees and/or their union first. Remember, the employee does not have to agree to any changes that are not mandatory.

Employment Agreement Builder

Things an employment agreement must contain

Employees should check if the change applies to them, and be aware of when they will get the increased sick leave entitlements.

How do employees need to prepare for the change?

New employees make sure that your employment agreement (contract) has 10 days’ sick leave as you start your job.
Make sure that you understand sick leave entitlement and how it works.
Ask your employer for an employment agreement, if they have not yet given you one.
Make sure that your employment agreement contains all the legal requirements.
You can ask your employer for a written variation letter in relation to the sick leave increase. The new minimum entitlements will apply whether or not an employment agreement is updated.
Ask your employer when your next sick leave entitlement is, and on that date make sure that your entitlement is for an extra 10 days instead of 5 days. You can check this on your payslip. If you do not receive regular payslips, you can ask your employer for one.
Your employer should discuss any changes to your employment agreement with you and talk to your union – if there is one in your workplace. You do not have to agree to any variation that is not legally mandatory.

Things an employment agreement must contain

Know your sick leave rights and responsibilities

Employers and employees should be aware of their rights and responsibilities in relation to sick leave:

Sick leave is paid time off work if an employee, their spouse, partner, dependent child, or other person who depends on them is sick or injured.
All employees (including part-time and casual employees) are entitled to sick leave if they have worked for the same employer continuously for over 6 months, or they have worked for the employer for 6 months for:
- an average of 10 hours per week, and
- at least one hour in every week or 40 hours in every month.
Unused sick leave at the end of a 12-month period can be carried over and added to an employee’s entitlement for the following year. The maximum number of days that can be accumulated as a minimum right is 20 days. Some employers allow for more than 20 days to be carried over or have unlimited sick leave entitlements.
Employees need to tell their employer as soon as possible that they want to take sick leave. A phone call is the best way, unless the workplace has its own system.
Unused sick leave cannot be cashed-up or be part of any final payment to the employee when they leave, unless this is in the employment agreement.
If an employee has run out of sick leave they can ask their employer for sick leave in advance, use some of their annual holidays, or could ask to take unpaid leave.

Sick leave

Other upcoming changes to sick leave

The Government has begun work to implement the recommendations of the Holidays Act Taskforce, which includes giving employees access to some sick leave from day one of employment, as opposed to only being eligible after 6 months. The Government expects to introduce this legislation in early 2022.

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