"My priority with these changes is to increase certainty and reduce complexity," says Minister for Workplace Relations and Safety Brooke van Velden ahead of planned reforms to the Holidays Act 2003.
"My priority with these changes is to increase certainty and reduce complexity," says Minister for Workplace Relations and Safety Brooke van Velden ahead of planned reforms to the Holidays Act 2003.
Opinion
Jannine O’Meara is a Business Central employment relations consultant for Hawke’s Bay and Gisborne. She has had extensive HR experience with Fletcher Challenge Forests and most recently with Wattie’s.
COMMENT
Minister for Workplace Relations and Safety Brooke van Velden announced on June 5, 2024 a promise to deliver improvements to the Holidays Act 2003 (“Act”) following a process for early, targeted consultation with stakeholders.
Starting soon, the Government will be consulting with businesses, workers and other informed stakeholders who will be affected by changes to the Act.
An exposure draft of a bill implementing the proposed reforms is due to be released in September 2024 for consultation. This exposure draft is a pre-cursor to the bill being introduced to Parliament and will provide an early avenue for consultation, in addition to submissions sought during the introduction of a bill through the select committee process.
“I want to get feedback from stakeholders who will eventually have to work with the Act. We need the Act to be workable for everyone, from the multi-national corporates to the small-town, family-run restaurants,” van Velden said.
“I believe it is important to hear from small businesses in particular, given small businesses will adopt a range of working arrangements and often do not have the same payroll infrastructure as larger organisations.
“My priority with these changes is to increase certainty and reduce complexity. This is about achieving sensible and workable legislation.”
The purpose of the targeted consultation is to test both the technical and policy details of the bill with stakeholders. Based on feedback provided, the Government may consider further changes before it introduces a bill to Parliament.
The Minister acknowledged that “change has been a long time coming, and I know there are many who are frustrated with the Holidays Act”.
“We need an Act that businesses can implement, and that makes it easy for workers to understand their entitlements.
“We need to do this once and do it right.”
In particular she commented on frustration felt by many employers at the previous Government’s change to the Act to double sick leave entitlements, one of 22 changes it made.
“Workplaces that rely on part-time workers are particularly vulnerable to unexpected staffing shortages. To explore this issue further, the exposure draft set for consultation will include a proposed approach to pro-rating sick leave, to better reflect how much an employee works,” said van Velden.
There had been criticism from many employers that certain changes implemented by the previous Government’s decisions increased complexity and compliance costs.
Its Holidays Act Taskforce made 22 recommendations which were jointly agreed to by union and business representatives and accepted by the previous Government. These included the following increased access to some leave entitlements:
· increased bereavement leave covering a wider family group;
· employees could take annual holidays on a pro-rata basis in advance of their entitlement; and
· employees returning from parental leave are paid according to the normal rules for annual holidays, rather than being based on their average weekly earnings over the last 52 weeks.
The exposure draft will include a change in how annual leave is provided, moving from an entitlement system to an accrual system.
“Shifting to an accrual system for annual leave entitlements is just common sense,” van Velden said.
“While workers might not notice any change in their entitlements, from a payroll perspective this should make a huge difference. An accrual system should help avoid the complex calculations that regularly stump payroll software and should therefore reduce compliance costs for employers.”
· a proposed approach to pro-rating sick leave so there is some proportionality to how much an employee works;
· simplifying calculating use of leave that does not require pay systems to access data about daily hours of work;
· objective criteria for using pay-as-you-go for annual leave and a less burdensome review process; and
· clarification that only full pay periods need to be included in 13-week reference periods.
The Ministry of Business, Innovation and Employment is inviting participation from stakeholders in the targeted consultation on the exposure draft of the bill who have expertise in payroll and business systems and/or an understanding of the impacts and outcomes of the Act for various groups of employers and/or employees.
