The New Zealand Government is planning to simplify its employment leave system by replacing its Holidays Act 2003 with a new Employment Leave Act.
One of the key changes includes shifting to an hours-based accrual for sick and annual leave. Under the old act, staff would become entitled to paid annual leave after 12 months of continuous employment with the same employer.
Other changes include a shift to pro rata sick leave, as well as the introduction of leave compensation payments for casual employees, family violence and bereavement leave, mandatory pay statements and the ability for workers to cash up on annual leave.
"Full-time and part-time workers will start earning annual and sick leave in direct proportion to the hours they work,” Workplace Relations and Safety Minister Brooke van Velden said.
“Parents returning from parental leave will no longer be penalised with lower pay if they take annual leave, sick leave can be taken in hours to match real life, and employers will finally have certainty with straightforward rules they can understand and apply.”
According to the peak body Retail NZ, the new system will make it fairer and more workable for both employers and employees.
“The move to hours-based accrual for annual and sick leave, and the ability for leave to be taken in hours rather than days, will significantly reduce complexity and compliance costs for retailers, especially SMEs,” Retail NZ CEO Carolyn Young said.
“Proportional sick leave for part-time workers and a single, clear method for calculating leave payments are also positive steps that will benefit the retail sector, where flexible and part-time work is common.”
But Retail NZ does not accept all the reforms, sharing concerns about the proposed increase in Leave Compensation Payment (LCP) for casual employees from 8 per cent to 12.5 per cent, and the move to pay annual leave at the full regular rate immediately after parental leave.
These proposals risk unnecessary cost increases for businesses, especially SMEs, without clear justification, Young said.
According to van Velden, parents and casual workers are set to get an increase in their entitlements.
“Under the current system, parents returning from parental leave often face reduced income when transitioning back from parental leave,” the Workplace Relations minister said. “Our reforms recognise the unique challenges faced by families returning to work after parental leave. Now, parents returning from parental leave will receive their full leave pay when they take leave.
“Leave payments will also be much simpler for casual workers.
“The idea of stored annual and sick leave is difficult to apply to casual work, where there is no expectation of ongoing employment or fixed hours. With the shift to the Leave Compensation Payment system, casual workers will receive a 4 per cent pay increase to recognise leave entitlements.”