Last week the government announced that it would review the Holidays Act.  So firstly, I want to give credit to the government in doing this. It is good to see they have recognised there are issues that must be resolved with this unworkable piece of legislation.  It has taken far too long for this review to happen.

When you read the terms of reference you can see MBIE is all over this as you would expect being the owner of the Act.  But MBIE is one of the reasons we have all of these issues with the Act and in reading the terms of reference, it can be seen they take no responsibility for their lack of support or leadership.  As soon as I saw sections of the terms of reference the warning signs started flashing for me because of the communication and struggles NZPPA has had trying to get clear responses on Holidays Act issues from MBIE.  Their “cone of silence” method of not setting direction for fear of being challenged is a hindrance to payroll and employers as we need to move forward by getting things out in the open so we have clear direction on how Holidays Act payments and calculations are to be applied.

Personally, I do not think this review will do anything to resolve the issues with the present Holidays Act or an updated one unless all parties are willing to do a major rethink about the fundamental issues. These issues include:

• what payments should be included or excluded from gross earnings for paid leave taken
• how time is used in the Act, be it hours, days or weeks as this presently undermines the legislation when employees are on variable work patterns.  

The bottom line is if paid leave cannot be paid as easily as paying an employee’s wage or salary, then any review has failed.

The terms of reference and media statements from the government about the review talk about ensuring employees will not get less entitlement than they are getting now, but that really is a no-brainer. Employees will still get 4 weeks annual holidays, 5 days sick blah, blah, blah. The real issue is what this entitlement will be paid at and that is where the review will come unstuck because to make the Act more workable, streamlined and hopefully with a good dose of common sense included, what an employee is paid for their leave will need to be more clearly defined than it is at present.  The problem with this is someone will lose as, overall, employees may need to be paid less for leave taken or employers will need to pay more for the privilege of simplifying the Act. Now I know for a fact employees will not be getting paid less with a Labour government that is so intertwined with the unions that when the government sneezes the unions are holding the handkerchief. Of course, the government will spend time window dressing why it is a good thing for employers to pay more with points such as this is helping reduce the present over-the-top compliance costs with the Act and the liability issues employers face to offset paying more in the future and, of course, having a social conscience in ensuring employees are paid fairly (which is a joke as the present Act gives them an inflated leave rate for 52 weeks “the gift that keeps on giving” as long as the system is setup correctly).  

Look at it this way, finally MBIE will have its way as it’s been made clear in a number of statements and publications that employers should “err on the side of caution and pay more if you are not sure what should be paid to an employee for leave”.  MBIE can now have its way as the review will ensure employers will end up paying more for leave.

This is the first of a number of posts on the review.  NZPPA and I won’t be invited to be part of this review as we have been raising issues with the Act since 2007 (but no one would listen).  As we have been outspoken on the lack of support and real leadership of MBIE as well as being critical of governments old and new, we are happy to sit on the fence and highlight the shortcomings of this review and how it will not help payroll going forward unless real change is considered.  

Written by: David Jenkins, NZPPA CEO

NZPPA supporting NZ payroll since 2007!