Holidays Act Review
The Government has accepted the Holidays Act Taskforce’s recommendations to make the Holidays Act clearer and provide greater certainty for employers and employees.
The purpose of the Holidays Act Review
The Government established the Holidays Act Taskforce to suggest improvements to the Holidays Act, following a joint request from unions and employers.
The Taskforce included employer, worker and government representatives, and was chaired by Gordon Anderson, a law professor at Victoria University with extensive experience in employment law.
The Taskforce was asked to make recommendations on options for a clear and transparent set of rules for providing entitlements to, and payment for, holidays and leave.
The Taskforce’s objective was to recommend changes that address the high degree of ambiguity that has made the Holidays Act difficult to understand and implement for employers, and to make it easier for employees to understand their entitlements.
The Taskforce’s recommendations
The Taskforce made 22 recommendations which were jointly agreed to by union and business representatives. The Government has accepted the Holidays Act Taskforce’s recommendations.
The recommendations revise the system for determining, calculating and paying employees’ statutory leave entitlements. The recommendations also include some changes to employees’ leave entitlements and introduce greater transparency to ensure employees are fully informed about their leave entitlements.
The changes include new methodologies and tests:
New processes for determining how much leave entitlement an employee needs to use for a period of time away from work.
A new test for determining an Otherwise Working Day.
Revised tests for determining if an employee is eligible for leave.
New processes for calculating payments for leave.
A revised definition of Gross Earnings.
A new test for when an employee may receive their annual holiday entitlement on a ‘Pay-As-You-Go’ basis.
The changes will increase access to some leave entitlements:
From their first day of employment eligible employees will be entitled to bereavement leave and family violence leave, and will begin accruing sick leave.
Bereavement leave will be expanded so that employees can access three days leave for more family members, including cultural family groups and more modern family structures.
The parental leave override will be removed, meaning that employees returning from parental leave will be paid at their full rate for all their annual holidays.
Highlights of the proposed changes
See a summary of the recommended changes in comparison to the current Act, below. They are discussed in more detail in the Holidays Act Taskforce report.
How holiday and leave payments are calculated
How deduction of entitlement is calculated
Taking annual holidays in advance
Family Violence, Bereavement, Alternative Days, Public holidays & Sick leave (FBAPS) eligibility
Transferring public holidays
Sale and transfer of a business
Next steps – implementing the Taskforce’s recommendations
The Better Rules approach
We have now begun to design the details that are required to implement these changes using the Better Rules approach. Information about the Better Rules approach can be found on the Better for Business website - linked below.
Better rules – better outcomes(external link) — Better for Business
MBIE has brought together a range of stakeholders from across government, business and unions to help with the detailed design work. The team includes people with skills in policy, Holidays Act enforcement and compliance, payroll system provision, payroll practice across a range of employment environments, business analysis, and drafting legislation.
The team members will contribute their insights into the practicalities of implementing the recommendations in payroll systems, and across a variety of complex employment environments. This will mean that the details will have been examined from a range of perspectives before they are drafted into law.
Our aim is to support the development of legislation that:
- Provides clarity and certainty around the rules for determining leave entitlements and payments, so employers have greater confidence that their employees are receiving their correct entitlements, and that they are meeting their obligations under the Act.
- Supports employees to better understand what their entitlements are.
- Can be operationalised in digital payroll systems and is workable in practice across a range of employment types and situations.
Having your say
The Government expects to introduce legislation into Parliament in early 2022.
The legislative process will provide the opportunity for all stakeholders to have their say on the changes to the Holidays Act. After the Bill’s first reading in Parliament it will be examined in detail by a select committee. Members of the public will be able to make written and oral submissions to the select committee.
The select committee will consider what submitters have told them about the Bill, along with advice from government agency officials, and then share their findings and recommendations with Parliament.
Read more about the legislative process(external link) — New Zealand Parliament
Read more about the role of select committees(external link) — New Zealand Parliament
When will the changes come into effect?
Once the parliamentary process is complete and the Bill is enacted, there will be a transition phase before it comes into force. The earliest the changes will come into force is mid-2023.
Payroll providers and businesses will have plenty of time and guidance to prepare for the changes. We will consult with stakeholders to ensure the timing of the introduction of the changes is workable in practice.
Employers’ obligations to remediate remain
Until the changes to the Holidays Act come into force, all of the existing rules still apply. This means that employers still need to comply with the current Act, and ensure they are providing the correct entitlements and payments to employees. Additionally, employers retain an obligation to remediate workers for historical underpayments.
Tools and resources are available of the Employment New Zealand website:
Holidays Act 2003 [PDF 1MB](external link) — Employment New Zealand
Addressing Holidays Act non-compliance(external link) — Employment New Zealand
Establishing the Taskforce
(The Minister for Workplace Relations and Safety made a minor amendment to paragraph 9 of the terms of reference.)
Holidays Act Taskforce members
The Taskforce included employer, worker and government representatives and was chaired by Gordon Anderson, a law professor at Victoria University with extensive experience in employment law.
The table below outlines the individual members of the Holidays Act Taskforce and which organisation they were representing.
|Gordon Anderson (Chair)||Victoria University of Wellington|
|Kirk Hope||BusinessNZ||Business member|
|Paul Mackay||BusinessNZ||Business member|
|Liz Coats||Bell Gully||Business member|
|Jo Tozer||MYOB||Business member|
|Richard Wagstaff||New Zealand Council of Trade Unions||Union member|
|Paul Tolich||E tū||Union member|
|Avalon Kent (July-December 2018)||New Zealand Council of Trade Unions||Union member|
|Christin Watson (July 2018-March 2019)||New Zealand Nurses Organisation||Union member|
|John Crocker (January-October 2019)||Unite Union / New Zealand Council of Trade Unions||Union member|
|Steve Hurring (March-October 2019)||Association of Salaried Medical Specialists||Union member|
|Paul Stocks||Ministry of Business, Innovation and Employment||Government member|
|David Fowler||Te Kawa Mataaho The Public Service Commission||Government member|
|Richard Philp||Inland Revenue||Government member|
Holidays Act: Issues paper
In August 2018, the Taskforce published an issues paper that set out its understanding of the key issues that employers, employees, and payroll providers face in trying to implement the Holidays Act 2003. The Taskforce considered feedback from stakeholders on the issues paper as it developed its final recommendations.
Interim report from Holidays Act Taskforce
In December 2018 the Taskforce provided an interim report to the Minister for Workplace Relations and Safety on progress with the review of the Holidays Act.
Accepting the Taskforce’s recommendations
Contact the review team
If you have questions about the review or the Taskforce, email Holidays.Act.Review@mbie.govt.nz