20 Mar 2024

A promise to overhaul the Holidays Act, again

From The Detail, 5:00 am on 20 March 2024

Complications with the Holiday Act have caused years of pay problems for employees and businesses. The government promises to fix it.

ACT Party deputy leader Brooke van Velden

Photo: RNZ / Angus Dreaver

Impossible calculations, incomprehensible entitlements - it's widely agreed across the political spectrum that the Holidays Act is a mess.

"We are doing non-stop audits trying to help our members with the issues in the act," New Zealand Payroll Practitioners Association chief executive David Jenkins tells The Detail

"It takes up probably about 80 to 90 percent of our work."

He says the Act has some good theory, such as minimum entitlements on annual leave, sick leave, bereavement leave, family violence leave and public holidays. But since it came to existence on 1 April 2004, it's been beset with problems.

"Every one of those leave types has a whole set of rules around it," Jenkins says. "The calculations are the problem... this Act works if I work Monday to Friday 8:00 to 5:00 and I get no other payments - just my basic wage. But as soon as you get someone that's got variable hours, a different work pattern, it falls down." 

Jenkins talks about some of the high profile Holidays Act breaches by different organisations, including New Zealand Police, Te Whatu Ora and even the Ministry of Business, Innovation and Employment - which manages the law. 

There have been several attempts to try to change it. In 2011, the National-led government changed the calculations for all leave but annual leave (which hasn't changed since the act was introduced).

Then Labour promised an overhaul, setting up a taskforce which came up with numerous recommendations.

But Jenkins says the problem was that it didn't fit with payroll systems.

"They didn't look at those recommendations in regard to 'what can payroll actually do' - so then we spent the time from that review right up to when the government changed to basically try to put that into a piece of legislation that payroll could use."

But he says they never got there. 

The National/ACT/NZ First government wants to "simplify the law" for businesses, according to ACT's deputy leader and Minister for Workplace Relations and Safety Brooke van Velden.

Jenkins hopes things will change, but says he's "heard these things before from other ministers and other governments".

The Detail also speaks to lawyer Barbara Buckett about wider changes van Velden wants to make in the workplace and employment sectors.

"Their focus is more business orientated, whereas... the last government, they were probably more looking at the employees side," Buckett says.

"I think she's trying to say we are in a different world - that businesses are operating in a different environment with these flexi working hours," says Bucket. 

For instance, van Velden wants to make it easier for businesses to use contractors, simplify personal grievances (as she says employers can be dragged through processes by "vexatious employees") and reform health and safety regulations. 

But there are fears this could lead to an erosion of workers' rights.

"The point is that it has the effect of cancelling out rights that employees might otherwise have," Buckett says.

"When you're going for a job, there's maybe a power imbalance in there and people end up agreeing to things... only later down the track they understand that they've given away something.

"On the business side, if you're a contractor then it's a freer arrangement and it's a clearer arrangement - there's no underlying obligations, such as we're talking about, in terms of holidays and leave and employment rights such as personal grievances.''

ACT has even proposed getting rid of public holidays in the past - but Buckett think it's unlikely that will come to fruition. 

"I think people talked about Matariki being swapped out for something else - that's about as far as I think it got - but to take away public holidays in general, I think there'd be a huge backlash." 

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