The Government yesterday announced a sweeping overhaul of employment leave legislation, including changes to how annual and sick leave is calculated.
Workplace Relations and Safety Minister Brooke van Velden announced on Tuesday that the Holidays Act would be repealed and replaced with a new Employment Leave Act.
The changes aim to simplify leave entitlements by tying them directly to hours worked, allowing leave to accrue from day one, and introducing a single calculation method for all types of leave. Casual employees would also see their leave compensation increase from 8% to 12.5%, among other changes.
“Gone are the days of multiple, confusing calculations for leave payments,” van Velden said. “All workers, businesses, and their families will benefit from leave payments being simpler and more predictable.”
Business groups welcome ‘long-overdue fix’
The Employers and Manufacturers’ Association (EMA) called the announcement a “long-overdue fix” to a system that had caused confusion and cost.
EMA’s Alan McDonald said the new law would bring “much-needed clarity and simplicity” to leave entitlements.
“Employers and employees should be able to more easily understand and apply the rules and that’s a win for everyone,” he said, adding that small- and medium-sized businesses would particularly benefit.
Retail NZ also welcomed the move to hours-based accrual and proportional sick leave for part-time workers, saying it would “significantly reduce complexity and compliance costs”.
Alan McDonald, head of advocacy for the EMA, and Workers First Union general secretary Dennis Maga speak to Breakfast. (Source: Breakfast)
Business Central agreed, adding that the “shift to an hours-based approach for calculating leave is particularly welcome, as it addresses one of the most persistent pain points for businesses”, acting chief executive Amanda Wood said.
However, Retail NZ chief executive Carolyn Young warned that some proposals, such as the higher casual leave compensation and full-rate annual leave after parental leave, could drive up costs for businesses.
Unions warn of ‘winners and losers’
The Council of Trade Unions (CTU) said the changes would create “winners and losers”. While it welcomed day-one access to sick, bereavement, and family violence leave, as well as fairer pay statements, it raised concerns about reduced sick leave for part-timers and the removal of commission and bonuses from holiday pay.
CTU president Richard Wagstaff said: “It is good that the Act will be simplified, but that didn’t need to come at the expense of the hard-won entitlements of working people.”
He warned the impacts would disproportionately affect Māori, Pasifika, women, and other vulnerable workers in part-time or insecure jobs.
Workers First Union was also concerned about the changes to sick leave.
“There is no defensible reason for a person working part-time to have access to less sick leave than someone working full-time,” said Dennis Maga. “No matter what hours you work, everyone is prone to getting sick, and especially those with kids who are more likely to be in part-time work.”
Opposition slams changes to sick leave
Labour accused the Government of breaking an election promise and “turning its back” on part-time workers.
Workplace relations spokesperson Jan Tinetti said: “People don’t fall ill on a pro-rated schedule depending on how many hours they work. No one should be forced to work while sick or lose income because they are unwell.”
She did, however, welcome a simplification of the overall system.
The Green Party echoed those concerns, saying women would bear the brunt of the changes.
“Getting sick doesn’t depend on whether you’re full- or part-time,” said Green MP Teanau Tuiono. “This move means yet more unpaid work for women already juggling jobs and caring responsibilities.”
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