The government has announced the release of an exposure draft of a Bill to reform the Holidays Act 2003 and called for interested parties to register to be part of a targeted public consultation.
An exposure draft is a version of a draft bill released for consultation before the government introduces the actual bill to Parliament.
The Holidays Act has long been a source of frustration for employers, payroll providers, and employees due to its complexity, and the government has made addressing these issues a priority.
The exposure draft will include some changes and additions to the previous government’s review of the Act, which was completed in 2021.
Aim of reforms
This main focus of the reforms is to simplify leave and payment calculations, and reduce the cost to employers of implementing them.
Proposals in the exposure draft include:
- Changing annual leave from a weeks-based entitlement system to a weeks-based accrual system.
- An approach to pro-rating sick leave so it is proportional to how much a person works (part-time employees currently have the same entitlement to paid sick leave as full-time employees: 10 days a year).
- Simpler methodologies for calculating use of leave that do not require payroll systems to access data about daily hours of work.
- Objective criteria for choosing ‘pay-as-you-go’ for annual leave and a less burdensome review process.
- Clarification that only full pay periods need to be included in 13-week reference periods.
Consultation
Targeted consultation on the exposure draft was completed in September 2024.
Officials will analyse the submissions and provide advice to the Minister on the next steps. The feedback provided will help the Government to make informed decisions about whether to do further policy work before it introduces a Bill to Parliament, how significant that work should be, and what to prioritise.
There will be a further opportunity for stakeholders to provide input once the Bill is introduced and is considered by Select Committee..
Visit the MBIE website to learn more more about the Holidays Act reform and progress of the Bill.
