The Ministerial Advisory Group conducting a review of the Holidays Act 2003 (chaired by Kiely Thompson Caisley’s senior partner Peter Kiely) has very recently reported back to Minister of Labour, Kate Wilkinson MP. The report details a number of recommendations for reform of the current Act, summarises the submissions heard by the group and provides commentary on the issues raised.
The Review Group was comprised of the Chairman, two employer’s representatives and two union representatives. Given these divergent perspectives, consensus could be reached on some issues but not on others. Where it was not possible to have unanimity, the report contains two sets of recommendations on behalf of the employer representatives and the union representatives. The group adopted the position of recommending the status quo remain intact unless an alternative was clearly going to offer an improvement.
Recommendations were made in the following areas:
Relevant daily pay – The employer representatives recommended that the legislation be simplified by providing for one rate at which all leave entitlements are paid using a calculation averaging earnings over the previous 52 weeks. Currently the calculation uses the previous four weeks, which can cause employees to enjoy something of a windfall if they receive unusual or one-off payments in that four week period, such as annual bonuses. They also recommended that the accrual of annual holidays and sick leave be calculated in the time unit that best suited the workplace. i.e. hours, days or weeks. The report details further the implications of this.
The union representatives recommended that payment for sick leave, bereavement leave, public holiday and alternative holidays (but not annual leave) be calculated using the same formula subject to two qualifications, namely that it is used for calculating pay only for situations where RDP presently applies and that the term “work units” is replaced by “hours”.
Trading in annual holidays for cash – This aspect of the report has gained significant media coverage.
The union representatives recommend that the statutory minimum entitlements for annual leave should not be able to be traded for cash.
The employer representatives recommended that employees may trade annual leave entitlements provided employees retain a leave balance of three weeks. This recommendation was made subject to a number of safeguards which aim to ensure that the leave entitlement is only traded with the employee’s full consent. These safeguards include:
- Only employees can request to trade in annual holiday entitlements and the request must be in writing;
- Employers have the right to refuse such requests but this also must be done in writing;
- That the matter cannot be included in employment agreements or raised in salary negotiations; and
- The value of the traded holiday is to be the same as if the holiday had been taken at the time of trading.
While this aspect of the Report has been criticised by media, since the publishing of the report the Minister has commented that being able to trade the 4th week of leave was part of the National Party’s election manifesto.
Casual Employees – The group recommended the current entitlements for casual employees remain intact and that the Department of Labour provide more educational information to employers and employees on casual employees’ entitlements.
There is a general confusion around the nature of casual employment and, in particular, how it differs from part time employment. A part time employee has regular work of some kind where a casual employee has no expectation of work in the future.
Transferring public holidays to another day – The group recommended that it should be possible for public holidays to be transferred by agreement subject to a number of safegaurds including:
- Agreement to transfer must be informed and voluntary;
- The public holiday to be worked must be identified and the other day on which the public holiday is to be worked must be identified;
- The public holiday must otherwise have been a working holiday for the employee and should be transferred to a day that is otherwise a working day for the employee and not a public holiday; and
- Agreement to observe a public holiday on another day should not be made so that the employer can avoid the obligation of paying a penalty payment.
Accumulation of alternative holidays – The union representatives here recommended the status quo remain intact because the current compensation of a day in lieu was compensation for missing out on time with friends and family.
The employer representatives recommended a simplification of the Act by deleting the ‘alternative holiday’ category all together and replacing it with a system where by when an employee works on a public holiday the units worked are simply added to their annual leave entitlements. This proposal has the advantage that the extra leave granted will be able to be taken as ordinary annual leave rather than having to be taken within 12 months.
Addition to or change of public holidays – The Group recommended that no changes be made in this area. Easter Sunday was considered separately, but in the case of all other public holidays it was found that the status quo remained desirable and the names and placement in the year were well established and accepted.
Should Easter Sunday be recognised as a public holiday? – The union representatives recommended that Easter Sunday become a public holiday because Easter Monday is already a holiday.
The employer representatives recommend the status quo remain and that Easter Sunday does not become a public holiday.
It appears unlikely that Easter Sunday will become a public holiday in light of Kate Wilkinson’s comments on the matter in the Sunday Star Times.
"We don't see the need to increase the number of public holidays. There is a misconception that Easter Sunday is a public holiday – it is not a public holiday. For those businesses who are claiming a surcharge, thinking it is a public holiday, the public need to be aware that it is not."
The next step is for the Minister to consider the report, receive advice from the Department of Labour and eventually make a recommendation to Cabinet on what changes, if any, should be made to the Holidays Act.
We will be closely monitoring the situation and will keep you up to date with any developments.
As always, please do not hesitate to contact us with any queries.
