Holidays Act


5th October, 2018

Why the Holidays Act needs to change (and how you can help change it)

The Holidays Act has been the bane of employers’ existence for many years. But with the government establishing a new taskforce to review the legislation, all of that could be about to change.

Recently, there’s been plenty of confusion around how parts of the Act apply and how employers can make sure they’re doing the right thing.

Luckily, employers now have an opportunity to change it.

The mass confusion led the government to establish a taskforce to review the Act to simplify the way employers calculate entitlements and leave.

Here’s why things needed to change.

1. The game of multiples

Any great legislation is simple.

The Holidays Act is not.

There are:

  • Multiple leave types: with rules for this and rules for that
  • Multiple time spans: a day for this and a week for that
  • Multiple rate calculations: the greater for this or an either for that
  • Multiple work patterns: sometimes this and sometimes that
  • Multiple payments in gross earnings: put it in for this, but not for that
  • Multiple and changing guidelines: hard rules for this, but none for that

It’s no wonder people are confused, navigating through all of this is a bit like finding your way through a maze.

READ: Holidays Act guidance – annual holidays and entitlements

2. What about small business?

Bigger organisations, with HR and payroll departments, are always better placed to deal with complex requirements.

The small business owner, who is tied up doing literally everything, doesn’t have that luxury.

And that’s important, because not only do small businesses pay about half of all New Zealanders, small business make up 99 percent of all businesses by number.

If you are a small to medium business owner, you may not have the HR or payroll expertise to correctly apply all the variables but no matter the system you use you need to understand your requirements and set your system up to manage them.

There are some things that the Act is very clear on, easily applied and can help with the variables; things like accurate time and attendance record keeping and accurate employment agreements.

It’s unlikely the Taskforce will recommend changes to these requirements and they should be a priority for all New Zealand businesses if they’re not already in place.

3. How New Zealanders make sense of the complexity

Most New Zealanders understand leave in terms of hours. We feel ownership of our annual leave as it accrues – yet the accrual calculation isn’t actually part of the Act at all.

On the business side, there’s a need to effectively manage leave liability – which is why accruing entitlements is the most effective way to understand future costs.

Changing work patterns of New Zealanders means this method of managing annual leave doesn’t fit for employees with variable working patterns. Businesses and software developers are having a near impossible task of navigating an effective way through this complexity and change is needed.

What we can do about it?

We need an Act that is simple and allows businesses to be confident they’re doing the right thing and freeing up time to focus on doing what they do best.

The great news is that a taskforce comprising government, businesses, unions and MYOB is getting together to recommend changes to the Holidays Act to update it for the modern workplace.

There is a genuine desire by all parties on the taskforce to work together, consult widely and develop pragmatic and workable solutions for getting this critical business function right.

I’m right behind this initiative and encourage you to do the same.

If you have any issues you would like to highlight, suggestions for how things could be simplified or just want to keep up to date, then the MYOB Change Maker portal is the place to go.

The ultimate aim is a Holidays Act that is simple, easily understood and meets the needs of New Zealand’s unique working environment.