Whilst the new Act has made a number of changes to the Holidays Act 1981, the three main areas of change are:
- the separation of, and increase in, minimum entitlement to sick and bereavement leave,
- the increase in annual leave entitlements, and
- the new requirement to pay employees time and a half if they work on a public holiday.
The Employment Relations Service (ERS) now has a series of fact sheets on the new holidays Act on its website: www.ers.govt.nz/holidays_act_2003
Increase in Annual Leave Entitlement
One of the more controversial amendments to the 1981 Act has been the increase in annual leave entitlement from 3 weeks to 4 weeks. Currently an employee becomes entitled to a minimum of 3 weeks’ annual holiday leave after 12 months of continuous employment; on 1 April 2007 this will increase to 4 weeks annual holiday leave.
The Act defines what 12 months of continuous employment includes, and for employees who have a continuous work pattern, there should be no problem working out their entitlement to leave. However, if the employee’s work pattern changes, calculating their entitlement may not be so easy. In such cases, the employer and employee can come to an agreement on how their entitlement will be calculated, or if they can’t agree, they can ask a labour inspector to decide for them.
Moving From Special Leave to Sick and Bereavement Leave
The entitlements to sick and bereavement leave have now been separated under the new Act, and the term ‘special leave’ is no longer used.
Sick Leave
From 1 April 2004 any special leave that an employee is entitled to under the Holidays Act 1981 automatically becomes sick leave. All employees who have worked for their employer for a continuous period of at least 6 months are entitled to a minimum of 5 days of paid sick leave a year. This can be taken if they are sick of injured, or if one of their dependents is sick or injured.
Furthermore the Act allows unused sick leave to be carried over to the following year, up to a maximum of 20 days’ entitlement in any one year.
Bereavement Leave
From 1 April 2004, employees who have worked for their employer for a continuous period of at least 6 months are entitled to take:
- 3 days of paid bereavement leave on the death of their spouse/partner, parent, child, sibling, grandparent, grandchild, or spouse’s/partner’s parent; and
- 1 day of paid bereavement leave on the death of anyone else who the employer accepts, in good faith, the employee had a close association with.
Employment Agreement Amendments - Leave
Many existing employment agreements use the language of the Holidays Act 1981, referring to “special leave” to express employees’ conditions of leave. If an employment agreement is framed in this way, the employer and employee should consider renegotiating the employment agreement to reflect the provisions and language of the Holidays Act 2003. Failure to make needed changes may create additional leave entitlements that were not intended. It is also important that any negotiated changes are recorded in writing, as “custom and practice” may not be sufficient if there is a dispute.
Public Holidays
The new Act keeps the right of employees to 11 paid public holidays per year, as long as they fall on days on which the employee would normally work. Employees must be given their “relevant daily pay” i.e. the amount they would have been paid had they worked.
Employers can only make an employee work on a public holiday if it would normally be a working day for them and their employment agreement requires them to work on public holidays. Employees who work a public holiday are entitled to:
- time and a half of their relevant daily pay; and
- a day off in lieu.
This includes employees who are working on an ‘on call’ basis, even if they are not called out.
Employment Agreement Amendments - Public Holidays
The new Act requires new employment agreements, from 1 April 2004, to include a clause stating the employee’s right to be paid time and a half if they work on a public holiday. Existing employment agreements must have such a clause added when they are next updated, or by 1 April 2005 at the latest.
Come and see us. We can look through your current agreements and make any necessary changes and suggest what you need to do to ensure that your employment agreements meet the requirements of the new Act.
Contact our employment law team by clicking here.
