Holidays Act

Holidays Act Review: A Wishlist

May 31, 2018


Payroll expert at FlexiTime

1 minute read

Well, it’s finally happening. This week the Government announced a working group to review the Holidays Act.  When I first heard of the review, I thought it highly unlikely that the resulting changes will be as far-reaching as what is required. Fortunately, the cabinet paper and terms of reference suggest this Government means business, unlike previous reviews that just tiptoed around the problems.

In my series of Holidays Act blogs, I’ve covered many of the complexities and inconsistencies in the Act and provided a solution. Here’s our wishlist for whatever changes are decided on, based on simplifying the Act and making it fairer:

  • Easily understood by employees. The current Holidays Act is hard enough for payroll professionals to understand – it’s nigh impossible for employees. They have no way of determining if the rate at which leave is paid out is correct. Very few understand what makes up their leave pay out in a final pay. Not to mention otherwise working days, parental leave, ACC…

  • Simple enough to be administered with a pen and paper (or at least a very simple spreadsheet). We’re shooting ourselves in the foot here – the more complex the Legislation the more dependant companies are on software to take the care of it. But for the first objective to be met, the calculations need to be simple.

  • No 12 month rolling anniversaries. There is no way point 2 can be achieved while every leave calculation requires up to 52 pays to be evaluated each time.

  • Units agnostic. It should not matter whether leave is measured in weeks, days or hours.

  • Immune to being ‘played’ by either employers or employees. As the cabinet paper elegantly puts: minimise perverse incentives on employers and employees. For example, by manoeuvring commission into a period directly before taking leave, employees can hugely increase their payment for the holiday. Employers can influence leave rates by modifying work availability prior to an employee taking a period of leave.

  • Remove the leave anniversary processing. The interplay between 8% holiday pay and 4 weeks leave is an unnecessary complication. Rather, employees should simply accrue leave as they go. This will remove various issues with closedowns and final pays.

  • Simplify public holidays. Determining OWDs and what should be paid for public holidays (and the other BAPS leave types) is a minefield. Forthcoming Christmas holidays should not discourage employers from taking on new staff, nor should an employee who works only Mondays receive nearly a week off more than an employee who works only Wednesdays.

  • Identical work results in identical leave. If two employees have worked 500 hours at the same pay rate, they should be paid the same holiday pay if they were to leave. It should not depend on when the work was done or the leave was taken.

We have a solution that covers off all these points, while enshrining the core principles of the existing Holidays Act.

Full credit to the Government for taking this bull by the horns. We’re hoping to be actively involved in this review, and can’t wait to see what comes out of it…


Payroll expert at FlexiTime

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