Yet another review of the Holidays Act

Last week's announcement by Minister of Labour Kate Wilkinson that a working group has been appointed to review the Holidays Act had an air of inevitability about it.

Since the early 1990s, and probably before, the Holidays Act has undergone a succession of reviews by different governments. The 2003 Act represented a fundamental re-write of the 1981 Act, which itself drew on legislation dating back to 1944. There have probably been very few periods when the holidays legislation has not been under review.

Despite all the criticism that has been levelled at the 2003 Act, it was a vast improvement on the 1981 version. The nature of modern day workforces, which have a myriad of different working patterns, means that it's impossible to anticipate or deal with every situation, whether you're talking about days off in lieu for working public holidays, annual leave, or calculation of holiday pay. You can either try to legislate for every situation, or build in some flexibility while having a minimum "floor" of entitlements. Successive governments have opted for the latter, recognising the former is impossible. The consequent tension between flexibility and minimum entitlements is at the root of many of the ongoing problems with the Act.

To their credit, both sides of industry have worked together to achieve balanced holidays legislation. The NZCTU and Business New Zealand (and formerly the New Zealand Employers' Federation) have worked with successive governments over many years. While some argue that this has resulted in a negotiated compromise, on the whole the process has worked, as we now have a Holidays Act that needs only a few tweaks rather than a wholesale re-write.

This is reflected in the narrow terms of reference for the latest review. National has made it clear that they are not going to knock annual leave back down to three weeks, nor roll back other entitlements. There are only three issues that the working party will be asked to consider. The first is the definition of "relevant daily pay", which impacts on the calculation of pay for public holidays, sick leave and bereavement leave, among other things. The definition is widely regarded as complex and difficult to apply, and there is no doubt that it could be finessed.

The other aspects are the Government's proposal to allow employees to request agreement from their employer to trade in the fourth week of annual leave (here's more on that), and transferring the observance of public holidays.

The Department of Labour's intention was that the 2003 Act would allow employees and employers to agree on the wholesale transfer of the days on which public holidays are observed, so that employees could (for example) simply have an extra 11 days added to annual leave. In 2007 the Supreme Court said the practice was not permitted by the Act, rendering the terms of many painstakingly negotiated collective agreements unlawful at a stroke.

The NZCTU has criticised the make up of the review team, of whom two out of five represent the employer's side of industry, and one advises the National Party - while there is only one union representative. While Labour loaded the dice in the opposite way with its working group on redundancy pay, the NZCTU does have a point - the review team is hardly likely to disagree with the Government on cashing in the fourth week of annual leave, for example.

Whatever the outcome of the review, one can only hope that the outcome of all this is that we will soon have a Holidays Act that is fit for purpose.

Greg Cain

Greg Cain is an employment lawyer at Minter Ellison Rudd Watts.

Photo / John Borren