Government calls for input on Holidays Act reforms

The government has announced it will release an exposure draft of a Bill to reform the Holidays Act 2003 and has 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

The exposure draft will be released for targeted consultation in September 2024. 

The Ministry of Business, Innovation and Employment (MBIE) is calling for interested parties to register their interest, especially stakeholders who have expertise in implementing the Holidays Act in payroll and business systems, and/or understand the impacts and outcomes of the Act for employers and/or employees.

The consultation aims to gather feedback on both the technical and policy details of the bill. Based on this feedback, the government may make further changes before introducing a bill to Parliament.

Visit the MBIE website to learn more more about the Holidays Act reform and to register your interest in the consultation.