Source: Employers and Manufacturers Association (EMA)
The passing of the Employment Leave Bill today is the most significant improvement to New Zealand’s leave system in more than two decades, says the EMA.
The legislation replaces the complex Holidays Act framework with a simpler, hours-based system for calculating leave entitlements, giving employers and employees greater confidence that leave is being calculated and paid correctly.
EMA Head of Advocacy and Strategy Alan McDonald says the reform delivers the clarity businesses have been seeking for years.
“The Holidays Act has been one of the most complex pieces of employment legislation employers have had to deal with,” he says.
“It has created uncertainty, confusion and back-pay liabilities ranging from thousands to tens of millions of dollars.
“After years of reviews and reform attempts, the new legislation finally delivers what businesses have been seeking: a simpler, more practical system for both employers and employees.
“The move to an hours-based accrual system is a sensible and long-overdue change that will make leave calculations far more straightforward and transparent.”
Under the new legislation, annual and sick leave will accrue in hours, directly linked to an employee’s standard hours of work.
The Bill also introduces a single hourly rate for paying leave, and makes annual, sick, bereavement and family violence leave available from an employee’s first day of work.
“We have consistently supported an hours-based accrual model because it reflects the way people actually work,” McDonald says.
“It creates a fairer and more consistent framework for employees, particularly those who work part-time, variable hours or flexible arrangements, while giving employers much greater confidence that they’re meeting their obligations.”
The EMA says the legislation also recognises the scale of change required by providing a 24-month implementation period before the new system takes effect.
“Businesses, payroll providers and software developers will need time to update systems, review employment agreements and prepare for the new requirements,” McDonald says.
“The transition period is essential to ensure businesses can implement the reforms properly and avoid repeating the problems that have plagued the current system.
“This reform won’t remove every employment law challenge, but it is a major step towards a leave system that is fairer, simpler and easier for everyone to understand and apply.”