Key points:
- Government intends to repeal and replace the Holidays Act 2003. A new Employment Leave Act to be in place before the end of this term.
- A 24-month implementation period is planned after the Employment Leave Bill is passed into law.
- Annual and sick leave will accrue continuously in hours from day one. Leave will also be taken in hours.
- Employees will earn sick leave in direct proportion to their contracted hours.
- Hours worked by casual employees and hours worked over and above contracted hours for other employees will have a front loaded 12.5% compensation payment in lieu of annual and sick leave accrual.
The Government intends to repeal and replace the Holidays Act 2003 with a new Employment Leave Act.
The Government highlights “The problems with the Act have been well canvassed over the years costing billions in large-scale remediation payments. Employers struggle to understand and apply the Holidays Act correctly, and employees struggle to understand their entitlements.”
Key changes planned:
- Moving to hours-based accrual for sick and annual leave
- Pro rated sick leave
- Compensation payment for casual employees: casual employees will generally see an increase to their pay by receiving an upfront payment of 12.5% for each hour worked
- Leave compensation payment for additional hours worked: any hours worked on top of contracted hours will not accrue annual or sick leave but workers will receive an upfront payment of 12.5% for each additional hour worked.
- Family violence and bereavement leave: employees will now be able to access bereavement leave and family violence leave from the first day of employment.
- Returning from parental leave: new parents will receive their full pay for annual leave when they return from parental leave.
- Mandatory pay statements: employers will be required to provide clear pay statements each pay period, itemising pay and leave in a way that’s transparent and easy to understand.
- Cashing up annual leave: Employees will be able to cash up 25 per cent of their total annual leave balance each year.
The Association’s view is that this is a significant step forward in addressing some long-standing issues that have affected both employees and employers across the country. This news will come as a relief to many of our members who were engaged in targeted consultation on these reforms.
How does this provide clarity for businesses?
The shift to an hours-based accrual system for sick and annual leave entitlements will provide greater flexibility within a simplified entitlement system. This better reflects the realities of modern-day employment relationships.
Take base leave entitlements for example. Currently:
- Employees are only entitled to four weeks annual leave after working for 12 months;
- Employees are only entitled to sick leave after working for 6 months; and
- Employees can only access bereavement and family violence leave after working for 6 months.
That isn’t how things work in the real world. Many employers make leave available to their teams well in advance of those timelines. However, the administrative burden and calculations required to allocate that leave in advance creates such a headache for our businesses. This is particularly frustrating when different calculations are required for a weeks-based annual leave system, versus a days-based sick leave system.
Under the new system being proposed, from the day they begin work, all employees will be entitled to accrue annual and sick leave. They will also have access to bereavement and family violence leave based on the hours they work.
Hospitality operates on flexibility
One of the benefits of the hospitality industry is our ability to provide flexible arrangements that work for both employers and employees. These changes will better recognise work patterns that go beyond the standard 40-hour work week. There are those in our industry who do not have regular work patterns at all – that is the most important piece to this for our industry.
We look forward to ensuring that the legislation to be introduced is fit for purpose, and to supporting our industry in a smooth transition to the new system.
Further reading:
- Overhaul of broken Holidays Act on the way – Government announcement
- Hospitality industry welcomes Holidays Act overhaul – Restaurant Association press release
- Holidays Act reform – MBIE