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Proposed Changes to Holidays Act

Published 01 Feb 2010

The Government is undertaking a review of the Holidays Act 2003 to:

(a) make the Act simpler for businesses and employees to understand and apply;
(b) reduce compliance costs; and
(c) ensure the Act is more readily applicable to a range of employment situations.

Please note these are proposals only and they are well away from becoming implemented, if ever.

A. The calculation of relevant daily pay (RDP) -
  • the employer representatives' recommendation is that the accrual and payment mechanisms for all statutory leave should be changed to simplify the legislation by providing for one rate at which all leave events are paid (i.e. annual holidays, alternative holidays, public holidays, sick leave and bereavement leave) using 52 week averages. It is proposed that this will eliminate distortions created by the use of 4 week averages.
  • The union representatives recommended that payment for sick leave, bereavement leave, public holidays and alternative holidays (but not annual holidays) is calculated using a formula whereby 'payment for a leave event' equates to the 'contractual hours of leave taken' multiplied by the 'standard leave rate'. Further, they propose that the 'standard leave rate' equates to 'annual gross earnings' divided by the 'contractual hours for the relevant period'.
B. Trading in annual holidays for cash - (two recommendations made)
  • the employer representatives recommend that employees are able to trade annual holiday entitlements provided a balance of 3 weeks of entitled annual holidays remains, subject to a raft of safeguards.
  • the union representatives recommended that the statutory minimum annual holidays entitlement should not be able to be traded for cash and were strongly opposed to such a proposal.
C. Casual Employees
The Ministerial Advisory Group recommends that the Government maintain the current entitlements for holidays and leave.
D. Transferring public holidays to another day
The Ministry Advisory Group recommended the ability for employers and employees to agree to transfer public holidays subject to conditions.
E. Accumulation of alternative holidays
  • the employer representatives recommend that the Act be simplified by:
    When an employee works on a public holiday, on a day that would otherwise be a working day, instead of accumulating a 'day' of leave that the number of work units worked on the public holiday are added to the employee's annual leave entitlement
  • the union representatives recommend no change to the accumulation of alternative holidays.
F. Treatment of public holidays
The group recommends no changes to the current legislative treatment of public holidays. With regard to Easter Sunday however, the union recommends that this becomes the 12th public holiday, and the employer representatives recommend the status quo.