Is it time to repeal the Holidays Act?

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It’s time for a repeal of the Holidays Act 2003, according to Simpson Grierson. A survey conducted by the firm, which draws on the responses of 196 HR specialists across a number of industries, shows a purported disconnect between the legislation and today’s employment realities.

The Holidays Act was originally drafted in 1981, a time when Simpson Grierson partner Phillipa Muir and senior associate, Rebecca Rendle, argue most businesses were closed on weekends and “a nine-to-five Monday to Friday work week was the norm”.

“We regularly receive feedback from employers that the Holiday Act is overly complex and no longer fits with the many and varied work patterns now in place,” say Muir and Rendle.

As a result of the survey, the firm recommends amending two key areas of the Act in order to make it simpler to apply and to provide clarity. These include:
  • One formula for payment of all types of leave (instead of the current four formulas); and
  • Accrual and payment of all leave in hours (rather than weeks for annual leave and days for everything else).
Of respondents, 82 indicated that they find the Holidays Act difficult or very difficult to apply, while only 38 find it easy or very easy.

“It works for people who work Monday to Friday and get paid an annual salary. For everybody else, it is difficult,” wrote one respondent.

Furthermore, most respondents (72%) reported already operating under a payroll system where leave is determined by hours, which is inconsistent with the Act. Muir and Rendle say this adds an extra layer of complexity around how calculations are made and the potential for error.

“While a work day or a work week may vary greatly between workplaces and between employers, a work hour is the same for everyone,” they note.

Other key complaints included the fact that there is no common approach on whether bonus/incentive payments are included in the holiday pay calculations, and that some employees taking parental leave may be at a disadvantage when it comes to holidays during the first year of their return to work.

“It is unfair for women returning to the workplace after taking parental leave, in that any holidays are calculated on the previous year’s earnings (which are zilch given [they] have been on leave),” wrote one respondent. “Therefore this penalises women who need to take leave (sick or holiday) to care for children upon their return to the workplace.”

Muir and Rendle say they hope the survey serves as a launch pad for wider discussion around the Act going forward.

“We hope the results of this survey will be a starting point for change and a wider review of how the Holidays Act can better accommodate 2014 workplaces and work patterns,” they say. “Based on these survey results, in our view, a re-write is needed.”

To view the report on the Holidays Act 2003 by Simpson Grierson click here.

Do you agree that a repeal of the Holidays Act 2003 is needed? Tell us your opinion in the comment box below.
  • Pippa Kennedy on 17/04/2014 11:56:29 a.m.

    I've recently moved from Australia where it is an hours based system and everything is pro-rated. A very productive and fair system in my view. New Zealand law is over engineering what should be a simple process.

  • Jan Kingett on 15/04/2014 1:11:43 p.m.

    I have a real problem with sick pay - we work 24 hour shifts but only 2- 3 shifts per person a week but have to pay 5 x 24 hours shifts per person meaning they get 2 plus weeks normal pay, sick leave entitlement. It should be 2% of annual income - much fairer and equivalent to pay for 40 hour 8-5 entitlements . Also Easter Sunday should be recognized as a Public Holiday as many people support 24hr 365 day workplaces. Also those who have rostered normal day on that day, for businesses that are normally open, many have to take a forced annual leave day or unpaid day. It is not equitable.

  • Jan Kingett on 15/04/2014 12:50:36 p.m.

    Having trouble with staff working 24 hour shifts in caring industry but only 2 shifts per week. Under "days" scheme they qualify for 5 days of 24 hours equal to 2 1/2 weeks of normal working week.Would work much better as percentage of hours worked ie 2% of annual income.Over three staff my liability for sick leave is grossly out of whack.Also find it hard that Easter Sunday is not recognized as a Public Holiday for those that have to work _ always pay me staff as if it is though.

  • Lisa Bell on 18/03/2014 12:04:55 p.m.

    Yes I agree that a repeal of the Holidays Act 2003 is needed. I am very keen to be involved in these discussions. Long overdue.

  • Louisa Pilkington on 7/03/2014 11:45:54 a.m.

    Re annual leave in hours, if down the track this is changed, we need to think very carefully about how it is changed. Hours aren't equal. One person's hour is a 40th of their working week, another person's hour is eg a 10th of their working week. Is the answer changing the Act or changing the payroll systems? I've worked in both predominantly part time and predominantly full time organisations and I think 4 weeks is much more sensible, explainable and defensible than an hours calculation.

  • Judy Mikoz on 7/03/2014 11:11:07 a.m.

    I'd be interested in hearing others' opinions around the Holidays Act provisions for sick leave which states the entitlement is 5 days per year. On reading the current legislation the 5 days per year seems to be the entitlement regardless of whether people work fulltime or part-time. This seems to be inequitable should a staff member only work less than 5 days a week.

  • Graeme Bisseker on 7/03/2014 11:05:57 a.m.

    I manage HR for 170 people in a business that provides 24/7/52 services at multiple sites. On my desk constantly is CCH's Guide to Holidays and Leave. The act is way to complex and fails to answer simple work situations easily e.g. transfer of public holidays must be notified individually to each staff member for each holiday - can't do general notifications; or where staff work mixed casual and permanent shifts and how the 8% gets paid etc. etc. It really needs a shake up.

  • Steve Punter on 7/03/2014 11:04:31 a.m.

    Ohhhhh yes. Long overdue.

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