Holidays Act Review


Last month, the Government announced a review of the Holidays Act 2003. This review is a positive step in looking at one of New Zealand's more complicated pieces of employment legislation.

The Holidays Act 2003 has been reviewed previously, however those reviews have failed to make meaningful changes to the Act to make it easier for all parties to understand and administer.

Over the past few years we have heard of employees' holiday pay being incorrectly calculated due to the complexity of the Holidays Act. The Ministry of Business, Innovation and Employment, the agency responsible for overseeing the Act, has even been found to be non-compliant with how it was calculating and administering leave provisions for its employees.

The Holidays Act, and its predecessors, was drafted on the premise of a forty-hour, five-day working week. We all know that this is no longer how many businesses operate. While there are still businesses that do operate for only 40-hours week over a Monday to Friday working week, there are also 24/7 operations, and many Monday to Sunday businesses that operate for variable hours. Improvements to the Holidays Act and the Employment Relations Act 2000 have also seen the introduction of flexible working arrangements. These arrangements have allowed employees and employers negotiate a broad range of working arrangements that work for both parties, which have resulted in anything but a "standard" week. Employees now work a broad range of flexible arrangements both as full-time and part-time employees.

The Review of the Holidays Act will comprise government, union and employer representatives.

The Review will also be expected to convene appropriate technical experts to robustly test options to ensure that the outcomes of the Review meet the objectives of the Review's terms of reference. The key objectives of the review are to develop options that:

  • make the provisions of, and payment for, entitlements to holidays and leave simpler and more readily applicable to the range of working arrangements in the labour market;

  • provide clarity and certainty to employers and employees so that employees receive their correct entitlements and employers' indirect compliance costs are reduced;

  • aim to protect the overall entitlements to employees; and

  • are easy to systematise and implement in payroll systems.

The Review does not remove your obligations as an employer to remediate any historical underpayments for leave. Nor does it alter your obligations as an employer to ensure compliance with the current Holidays Act.

Any changes or new Holidays legislation is at least two years away. Even then it is envisaged that there will be a significant implementation period following that to allow for service providers to develop new products to deliver on any changes.

More details of the Review of the Holidays Act are available on the Ministry of Business, Innovation and Employment website, as is a copy of the Terms of Reference for the Review.

By Photo by Ben White on Unsplash.

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