NEW TRAPS IN THE HOLIDAYS ACT

You may be aware that the Holidays Act 2003 came into force on April 1st 2004, replacing the existing Holidays Act 1981.   The new Act contains some major changes and new obligations for employers in New Zealand.

The change most hotly debated in the media has been the increase in minimum annual holidays from 3 weeks to 4.   However, this is not effective until 1 April 2007.   The changes that could affect every employer from the end of this month are:

PUBLIC HOLIDAYS

All employees are to be paid time and a half for time worked on a public holiday.   If the public holiday falls on a day that would otherwise be a working day for an employee, or the employee is required to work on a public holiday, that employee is entitled to an alternative holiday as well.   This is commonly known as a "day in lieu".   For clarification, an employee is not entitled to an alternative holiday if they work for the employer only on public holidays.  

An employee can only be required to work on a public holiday if this is provided for in his or her employment agreement.   If your agreements don't contain such a provision already we would recommend including one.   While you are doing that, you will also need to include a clause in all agreements confirming that each employee is entitled to time and a half for a public holiday.   This is required by the Act as all agreements need to be amended by 1 April 2005.  

Further, there is an issue if an employee is on call during a public holiday.   The status of the call back requirements need to be clarified if you are to avoid difficulties.

SICK AND BEREAVEMENT LEAVE

Under the existing Act employees are entitled to paid special leave of 5 days every year for either sickness or bereavement.   Employees cannot carry unused special leave over from year to year.   Under the new Act, however, sick leave and bereavement leave entitlements are treated separately.   Employees are now entitled to 5 days' sick leave each year and they may take it if they are sick or injured, their spouse is sick or injured or a dependent is sick or injured.   Sick leave may be carried over each year up to a total maximum of 20 days' current entitlement in any year.   Also, an employer can only require proof of sickness or injury if sick leave is taken for 3 or more days in a row.

Employees are entitled to 3 days' paid bereavement leave on the death of a spouse, parent, child, sibling, grandparent, grandchild or spouse's parent.   Employees are also entitled to 1 day of bereavement leave on the death of any other person in certain cases.   When assessing whether bereavement leave is appropriate in those other cases an employer can take into account relevant factors such as the closeness of the association between the employee and the deceased person, whether the employee has to take significant responsibility for all or any of the arrangements for the ceremonies relating to the death and any "cultural responsibilities" of the employee in relation to the death.   It is important to note that there is no limit to the number of times an employee can take bereavement leave each year!

"PAID AS YOU GO" ANNUAL HOLIDAY PAY

An employer is only allowed to pay an employee his or her holiday pay together with the employee's regular pay (instead of giving them holidays) if the employee is employed for a fixed term for less than 12 months or the employee is employed on such an irregular or intermittent basis that it would be impracticable to provide them with paid annual holidays.   The employee must agree in their employment agreement to receive holiday pay in this way.

OTHER OBLIGATIONS

Under the new Act an employer must inform a new employee about their entitlements under the Act and that they can obtain further information from their Union or the Department of Labour.  

PENALTIES

Penalties for breaches of the Act have been increased to a maximum of $5,000.00 in the case of individuals and a maximum of $10,000.00 in the case of a company or other body corporate.

OUR RECOMMENDATIONS

All employers need to be aware of employees' additional leave entitlements under the new Act and the other matters referred to above.   In many cases changes will have to be made to employment agreements and there is a requirement to make the changes by April 2005.   We strongly recommend you contact us for further information about the new Act and for assistance in preparing new agreements or redrafting existing ones in the course of the next 12 months.   Please get in touch with the person with whom you normally deal at Duthie Whyte.

16 March 2004