Holidays Act reform: Let’s get it done once, and done right - Alan McDonald

Alan McDonald, head of advocacy and strategy at the EMA. Photo / Alex Burton

Alan McDonald is head of advocacy and strategy at the EMA.

OPINION

It’s hard to think of a piece of legislation that has needed reform for as long as the Holidays Act.

Successive Governments have promised to fix the issues, but have largely failed to deliver any meaningful change.

In our view, it’s time for the Holidays Act to be scrapped and rewritten. Our members agree that it’s too complicated and is costing businesses time and money. In the past, the approach has been to largely ignore the main problems and tinker with existing legislation, adding complexity.

The main issue for employers is the complex calculations for annual leave, public holidays, sick days, and bereavement leave.

There are now many different styles of work and it’s challenging to accurately figure out how much workers are owed.

The previous Government’s attempt at reforming the legislation was far too complicated and hasn’t seen the light of day.

The coalition Government is attempting to reform the legislation with an exposure draft which was released for targeted consultation in September.

The EMA was one of the organisations asked to review the exposure draft and provide feedback. We’ve worked with selected members of the EMA and BusinessNZ, and we’ve taken into account numerous comments and conversations with members over the years to gather a range of opinions to inform our submission. Our aim is legislation that is simple to understand and efficient to operate.

We also successfully tested that thinking with around 500 EMA members in a webinar in October.

We are still under a non-disclosure agreement as part of reviewing the draft, but we don’t believe it has gone far enough in seeking to fix the act.

A suggested hours-based accrual system is an approach that is largely agreed by business and MBIE, the ministry responsible for developing the new legislation.

But the current proposals don’t apply a consistent approach or calculation for the various types of leave, partly retrofitting new calculations into the old act instead of replacing the act entirely.

It’s no secret that the new act proposes to reduce pro-rata sick leave entitlements for part-time workers instead of a blanket 10 days, a proposal supported by the EMA and many of our members. It never made sense that someone working one shift a week gets the same entitlement as someone working five days a week.

That’s in our submission, along with a request for a more disciplined approach around the uses and granting of medical certificates.

Trying to define extended families, and who can take paid bereavement leave, is also a challenge when our workforce now features many different ethnicities and belief systems.

We prefer an approach where the law does not try to define what constitutes a close family member. Instead, we think there should be a cap on days of bereavement leave, with some employer discretion in granting leave in difficult circumstances. Once that cap is used up, it’s down to wider family and friends to decide if they need to take unpaid leave to attend. That approach will need to be refined further.

In our submission on the exposure draft we have asked that other forms of leave be revisited and that includes domestic violence leave.

We are strongly supportive of the need for this leave but have never supported the cost of it sitting with employers. The take-up rates for this leave are very low – less than 1% – but our view has always been that payment should sit within the welfare system, perhaps reimbursing the employers who grant the leave.

In addition, we believe an hourly accrual system would help to iron out many issues around accruing leave while on paid parental leave, ACC or jury service.

Unfortunately for those already struggling with the current Holidays Act, the impact of the EMA’s approach in our submission may be to slow down the timeline, as we are asking for a new act rather than a partial fix.

Submissions on the exposure draft closed early October, and the next step is the introduction of the new legislation for a first reading in the House, possibly by the end of the year or early 2025. Once passed, this will go out for submissions and appearances before the select committee.

Final legislation could be passed by mid-2025, with a 12-18 month delay before implementation as new payroll software is written and rolled out. We also want a grace period against prosecution of 12-18 months while employers bed in their new systems.

Considering how long we have put up with this current problematic legislation, let’s get a new Holidays Act done once, and done right.