Payroll & Finance

Newsflash – Government may review holiday pay calculations

October 31, 2014


Payroll expert at FlexiTime

2 minute read

Our articles about issues with the Holidays Act and holiday pay calculations seem to be quite timely. The Government has just announced after the passing of the ‘Tea-break’ Employment Relations Amendment Bill that it is considering reviewing the calculations in the Holidays Act. We’re glad to see a possibility of action on this. And we’re not the only ones.

Earlier in the year Simpson Grierson hosted a working group looking at the Holidays Act calculations. They came up with six key findings that all pointed to the fact that a repeal of the Holidays Act was overdue. Their findings are detailed here. Simon Bridges, the Minister of Labour at the time, was involved in the working group and found it “insightful”.


Recently the New Zealand Payroll Practitioners Association (NZPPA) has announced that it will also be pushing for a review of the Act. After the 2010 amendments, the NZPPA, in association with the Department of Labour, put together a specification for payroll software, detailing the calculations that are required and the accepted way of interpreting the Act. In the last couple of months however, MBIE have decided they will no longer endorse this document. Consequently it is no longer available and there is no definitive resource. NZPPA’s energies are now being focused on highlighting the various issues with the Ministry.

The IRD provide a thorough specification for tax calculations. I was at a workshop for payroll software providers run by the IRD today, going through the minutiae of this specification. IRD put a lot of work into ensuring we have everything we need to provide the best possible tax solutions. For the Holidays Act there is nothing remotely comparable.

Talking with representatives from other payroll software and intermediary companies, every one is in agreement that the Holidays Act is complex and I’m sure they all would welcome a thorough review.

But then, we were hopeful back in 2009 that the review done by a Ministerial Advisory Group would simplify the calculations. This came to very little and we were disappointed by the changes to the act in 2010. Hopefully next time around there will be better progress.

However, it doesn’t look like this new review will be happening immediately. According to Michael Woodhouse “What we need to do is have a look at our legislative priorities and what we campaigned on and make them our first order priorities.” So don’t hold your breath.


Payroll expert at FlexiTime

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