Brooke Van Velden, Minister for Workplace Relations and Safety has announced a new act replacing the complex Holidays Act 2003 - the Employment Leave Act.
The proposed simpler approach is touted as a win for both employees and businesses alike. The aim is to simplify how leave is calculated and managed, and provide a robust fair system for all far more fit for purpose that the current Holidays Act 2003.
The new approach will be that regardless of employment status employees will have access to all leave types from the first day of employment, not having to wait 6 or 12 months as is current.
Annual and sick leave will accrue on an hourly basis. Annual leave will accrue at the rate of 0.0769 per hour worked and sick leave at 0.0385. These ratios work out to be the equivalent to 4 weeks and 10 days respectively for a full-time worker.
Sick leave will accumulate up to a maximum of 160 hours which is the same as the current concept of 20 days, and can be taken in hours when needed.
Bereavement and Family Violence Leave again, accrues from day 1 as above but on a daily basis and may be taken in part days.
Employees will also be able to request to be paid out up to 25% of their annual leave every 12 months rather than being limited to '1 week'.
This sort of solution will address common pitfalls in the current regime such as staff changing working patterns for example going from full-time to part-time or the converse, get to keep the hours of leave they have previously accrued. This being a major challenge for the current system whereby a change in an employee's ordinary working week can slash their entitlement in certain circumstances.
Leave Compensation Payment (LCP)
A new concept in the coming Bill is LCP and will be for casual and waged employees who work more hours than their contracted hours.
Instead of accruing leave as above, these hours will be paid out at an additional 12.5% on the agreed rate in compensation for annual leave and sick leave.
Public Holidays will remain that they are paid if it is an Otherwise Working Day (OWD) for an employee, but a new test for an OWD aims to remove any argument about whether it is an OWD for the employee or not. If the employee has worked at least 50% of the corresponding days of the week over a relevant period.
Alternative holidays (working on an OWD) will be accrued on an hour for hour basis and can be taken or cashed out at any point (as opposed to having to wait 12 months).
Timeframe
Clearly a new act like this is a massive undertaking for a Government to draft then enact, and subsequently for both business owners and payroll providers to adjust and comply. At this stage, the Government is aiming to have the new Bill drafted by early 2026 and passed before the next election (Dec 2026) then a transition period of 24 months to the new system from the Bill passing to the enforcement of the new Act.