Time for the Holidays Act to be overhauled says HR

by |
Last week, HRM revealed law firm Simpson Grierson is recommending amendments to the Holiday Act after a survey by the firm revealed that respondents find the Act difficult or very difficult to apply.
And the call has the backing of those within the HR industry, with all those who HRM spoke to agreeing with Simpson Grierson’s report on the topic.
Elephant Training & HR general manager, Angela Atkins, told HRM the Act is “confusing, doesn’t work for most companies who don’t just have 9 – 5 full-time workers and takes up HR or payroll time trying to figure it out”.
“I’d say the Holidays Act definitely causes more friction than flow. It does also disadvantage mums returning to work after parental leave as their leave is affected,” she added.
Atkins said it would be simplified if it had the same pay calculation for all leave and accrued in hours.
“This would mean in HR we’d be able to spend time with managers helping them find better ways to manage their team, rather than figuring out how to apply the Holidays Act. We had a client last year who had an 18 page opinion from a lawyer on how they should be dealing with their shifts and public holidays – and they still couldn’t understand what to do. We ended up developing a one-page manager’s guide just for this as it was complicated but many hours of time were spent on something that shouldn’t be as difficult as it is,” she said.
“If the Government working party developing the legislation just got a group of HR Managers from different industries in the room for two hours before they started a redraft, I would guarantee we’d be able to throw a hundred situations and issues on the table and make some great suggestions for simplifying the Holidays Act! After all, we have to work with our managers on it almost every week.”
Jason Ennor, managing director of MYHR, told HRM that many smaller businesses do not calculate leave properly – not out of a desire to pay people incorrectly, but because of “genuine confusion or misunderstanding”. As they do not understand the various calculation methods, they therefore rely on one formula which can result incorrect payments he added.
“In a country of small businesses the legislation should support optimal business efficiency while protecting the basic rights of all employees. I don’t believe the current Holidays Act does this.  In its current form the law creates an unnecessary administrative burden and confusion,” he said. “A simple and consistent formula for accruing and paying all leave would make a big difference.”
Ennor added that managing excess leave is also a problem for many employers.
“The foundation principle of the current Act is that an employee’s right to take leave is protected and only 1 week each year may be cashed out. I think this is a good principle. But the reality is that some employees want to cash out their leave, for example: they may only work 1 day a week on a permanent part-time basis and therefore have no need, or desire, to take what amounts to 4 days annual leave each year. Also where historic accruals have built up it becomes very hard to manage, some large leave accruals can never realistically be taken.  New legislation could still protect the right to take a holiday, but allow for greater cash-out flexibility,” he explained.
Writing in the comments section of the original article Graeme Bisseker, an HR manager for 170 people, agreed the Act is “to complex and fails to and fails to answer simple work solutions” and that it needs “a shake up”.
While Louisa Pilkington commented that if annual leave in hours is changed careful consideration would be needed in regards to 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 four weeks is much more sensible, explainable and defensible than an hour’s calculation,” she wrote.
What do you think needs to be changed in the Holidays Act? Share your thoughts in the comment section below.

HRD Forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions