Fix the Holidays Act

The Herald reports:

An overhaul of the is planned to make it simpler and prevent confusion which left thousands of workers shortchanged on annual leave and some government departments and employers with large bills for historic underpayments.

Workplace Relations Minister Iain Lees-Galloway announced a joint taskforce of Business NZ, the Council of Trade Unions and the Government to review the law, with recommended changes expected in a year’s time.

There have been calls for an overhaul from both business and the unions after confusion around the calculation of holiday pay caught out several government departments and private companies and meant some workers were not given what they were due. …

Lees-Galloway said the 15-year-old law which sets minimum entitlements for holiday, sick and bereavement pay needed reviewing to ensure it was fit for the modern workforce. It catered to a nine-to-five working day, which was no longer as common. “It can be very challenging to work out exactly what people’s entitlements are when they work what would traditionally be called irregular hours, but which these days are a normal part of working life.”

The current law is a nightmare. It is overly complicated.

There are basically two areas to it – annual leave/holiday pay and public holidays.

For annual leave it gets very complicated working out how much leave is due, and at what pay rate as meant to be average of the last year.

I’d set annual leave as the following:

  • A week’s annual leave is deemed equal to 2% of hours so an employee with four weeks entitlement is 8% and five weeks 10%.
  • The amount of leave earned is simply 8% (for four weeks) of the hours worked. So for every 100 hours worked you earn 8 hours annual leave. Simple and easy.
  • The rate at which the leave is paid is the current ordinary pay rate of the employee. Far too difficult to work out average hourly rate for the last year. It will actually favour employees to use current pay rate as the current rate tends to be higher than the average
  • No need to technically wait a year before you can use annual leave. The moment you get a positive balance, you can use it (subject to employer agreeing the dates are suitable)

For public holidays I’d be tempted to do similar. The current law is you only get paid if you are rostered on those days, but some people don’t always work the same day of the week. Also a bit harsh on say people who work Tuesdays to Thursdays and get almost no public holidays while those who do Mondays and Fridays get most of them.

So for public holidays why not just make it all employees get 1/250th of their earnings for the last year on each public holiday. So if you have earned $50,000 in the last year you get $200 extra pay on a public holiday. Obviously if you work that day also, then you get paid for that work also.

Basically the law should be something that small employers can cope with, and that payroll software can easily calculate.

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