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Employment Law: What to look out for in 2023 (Episode 1: Holidays Act Reform)

Home Insights Employment Law: What to look out for in 2023 (Episode 1: Holidays Act Reform)

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Published on: February 28, 2023


Please note, this is a script from Episode One of our video series, Employment Law: What to look out for in 2023, which you can access here.

Welcome to the first instalment of our series, Employment Law: What to look out for in 2023.

Today, we're briefly going to cover amendments to the Holidays Act. I think for all of us working in employment law, HR or payroll, we all know that the act isn't fit for purpose, but how to fix it is another matter entirely.

We were expecting a Bill to be released in late 2022, but no sign of it yet, and no updates on timing. With everything happening in politics and now the Auckland flooding, we expect that there may be a bit of a delay.

So, two questions you should be asking:

1. What will the new Act contain?; and
2. Why worry about it now?

As you may be aware, in recent years a Holidays Act working group was formed. They issued a report way back in 2019. The Government has indicated that it will accept all of the recommendations in that report.

So, what's likely to change? The Government has indicated that it will include prescriptive rules, which will assist employers with calculating and paying leave. We're anticipating a couple of key clarifications.

Firstly, an amendment to the definition of gross earnings to remove the question about discretionary payments - all payments will now be included.

Secondly, a definition of otherwise a working day, which would be based on corresponding days worked previously, to make it clear when employees with changeable working patterns would be entitled to take sick leave or entitled to Alternative holidays.

One thing that is somewhat of a surprise is that the working group has recommended that leave will remain to be accrued in weeks, rather than days or hours. It will be interesting to see if this makes the final Bill.

Overall, definitely a 'watch this space' issue. When we do get a Bill, it will still need to go through the usual parliamentary processes, including a select committee, and that means the prospects now of new legislation before the election in October must be slim.

To our second question, "Why worry about this now?", first, it's always good to understand what's coming down the pipeline. Second, if you're proposing any changes to how you might pay, record, or calculate leave, it's best not to do that at the moment. Always better to understand what this new landscape will look like before you make any changes.

Next week in Episode Two we will be covering Fair Pay Agreements - stay tuned! 

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