Source: BusinessNZ
BusinessNZ welcomes the passing of the Employment Leave Bill, and says it marks the end of one of the most costly and confusing pieces of workplace law ever forced on employers and workers.
The Bill repeals and replaces the Holidays Act 2003, moving to a simpler, hours based system where annual and sick leave accrue from day one – giving both employers and workers far greater certainty about what they are owed and what they must pay.
BusinessNZ Chief Executive Katherine Rich says the 2003 Act has been one of New Zealand’s most problematic pieces of employment legislation.
“Even employers that wanted to comply found it difficult to do so because the Act became increasingly complex as work patterns evolved beyond the traditional Monday-to-Friday, 40-hour week.
“It has cost employers hundreds of millions of dollars to put right, and it has meant too many workers didn’t get the pay they were entitled to. Fixing it is common sense.”
The Act was so complex even government departments and agencies were caught out.
Health New Zealand estimated it had incorrectly calculated leave for around 90,000 current and 130,000 former employees; it paid out around $961 million in remediation.
Meanwhile, between November 2015 and June 2020, the labour inspectorate investigated and enforced Holiday’s Act breaches resulting in more than $237 million in remediation payments to over 22,7000 employees across numerous organisations – and that was likely only the tip of the iceberg.
“When a law is so complex that even the government departments enforcing it can’t get it right, you know the problem is with the law, not the employers,” Rich says.
“Crucially, this was never just a big-business issue. As MBIE itself acknowledges, the Act’s provisions are “unclear, overly complex, difficult to apply for diverse working arrangements, or challenging to systematise in payroll systems”, meaning even the smallest employer with a handful of staff could be caught out.
“Behind every one of these numbers are payroll teams spending months untangling calculations, and businesses diverting money and time that could have gone into growth, wages and jobs.
“A simple accrual-based approach will remove many of the opportunities for confusion that have persisted under the current Act and which have cost businesses hundreds of thousands of dollars in recent years.
“BusinessNZ has long advocated for an hours-based approach to calculating leave which is simpler to apply to non-standard working hours than the current weeks-based system.”
Other changes in the new legislation include leave entitlements required to be proportionate to hours worked, access to leave entitlements from the first day of employment, increased leave compensation payments for casual employees, and more flexibility to cash up annual leave.
“While we look forward to these changes we also applaud the longer lead-time, which should give software developers and payroll providers enough time to convert their systems to reflect this new approach. In practice, employers should be able to make more straightforward leave calculations, and employees can be reassured they are being paid correctly.”
The BusinessNZ Network including BusinessNZ, EMA, Business Central and Business South, represents and provides services to thousands of businesses, small and large, throughout New Zealand.