A Ministerial Advisory Group, consisting of employer and employee representatives, has been appointed to review the Holidays Act 2003 (the Act). The Group will advise the Minister of Labour on options for amending the Act (without reducing current entitlements) to:
- make it easier to understand
- reduce direct and compliance costs, and
- make it more flexible in application.
The Group is interested in receiving your written submissions on the following matters. To help focus your submissions on the areas of the Act the Group will review, a list of questions is provided below. Other areas of concern with the Act have already been identified in previous reviews. The Group will take any relevant concerns previously raised into consideration.
The closing date for submissions is Friday August 21st at 1700.
To make a submission click HERE!
Well said Matt in relation to why does the employer have to act as a bank. It seems the concept of personal responsibility is so foreign in this country.
Paybug
Our submission #2, which repeals the Holidays Act and replaces it with something much easier to understand and comply with:
This alternative, simple and radical submission is to repeal the current Act in it’s entirety, and replace it with a Leave Allowances Act.
The new Act would promote productivity, as employers would only pay for productive time and would not carry any liability for any type of leave.
The intention is to relieve employers of their obligation to act as “leave bankers and calculators” (an excessively complicated process), and put the onus on the employee to be responsible for their own leave – just as they are responsible for all other aspects of their lives, such as their career, education, driving, drinking, mortgage, social responsibilities etc.
Under this scheme, there would be no leave accruals, no termination payments, no calculations for any kind of leave at all.
The new Act would provide for the following:
Salaried Employees
==================
A salary shall be deemed to be all-encompassing (it covers all time away on annual leave, personal leave, long service leave and public holidays – whether worked or taken)
Leave without pay shall be applied where absence exceeds fair use (e.g in excess of 35 days in any year of service, pro-rated for the service elapsed).
Casual Employees
================
Any person may enter into a casual contract, regardless of the term of service, hours worked, or any other factor.
This enables such employees to work other jobs as they see fit to suit their own lifestyle.
A payment of 8% on top of all remuneration for each pay period will compensate the employee for all leave entitlements and obligations.
Piece-workers
=============
A piece-worker is an employee who derives all or part of their remuneration from units other than time.
A piece-rate will be agreed between the employer and employee.
There is no obligation to meet minimum hourly pay rate requirements (poor performers should NOT be rewarded for being poor performers).
A payment of 8% on top of all remuneration for each pay period will compensate the employee for all leave entitlements and obligations.
All other employees
===================
A payment of 14% on top of all remuneration for each pay period will compensate the employee for all leave entitlements and obligations.
(the 14% is equivalent to 4 weeks annual leave, 5 days personal leave and all public holidays).
The employer’s only obligation is to permit such employees to take at least 2 weeks uninterrupted leave during each year of service (including the first year of service).
Leave does not accrue.
All leave is unpaid for it’s duration.
There will be no termination value.
Our submission #1 (which tries to deal with some of the issues with the current Act, but we still end up with a complicated mess):
================================
One of the greatest burdens we face is assisting employers to understand the implications of the Act – when most still “believe” it’s OK to accrue on a percentage or hours basis, pay out ordinary time (normal hours @ normal rate) only instead of RDP, accrue alternative leave based on hours worked on a public holiday, and so on – despite providing the correct calculations and accrual methods by default in our systems.
So, we’re all in favour of simplifying the Act, however we also accept that the Act does attempt to address the inconsistencies in the old Act, whilst introducing many inconsistencies of it’s own – and these should be resolved by any review process.
I have probably left a lot of issues out of the following submissions, but am quite happy to provide further information and to discuss any related issues further.
The major inconsistencies we see are:
=====================================
1. Salaried staff – there is nothing in the Act to preserve an agreed salary value. Salaried staff are subject therefore to the same rules as anyone else, which means:
a) for working a part day on Public Holiday the salaried employee may receive less pay than they would have otherwise received under their normal salary – they get paid the hours worked @ 1.5 rates, which may be less than their normal salary for the day (e.g. 1 hour worked might produce only 1.5 hours worth of pay, not the full salary for the day)
b) RDP may cause fluctuations in earnings that exceed base salary. This can occur where employment has changed recently to an agreed salary, but earnings avereged over the last 4 weeks (or even per day over the last 4 weeks in the case of shift or on-call workers), and where an intermittent bonus payment has been received in the last 4 weeks.
Suggestions: Enshrine “salary” as an agreed amount which is not subject to the Act (including abolition of alternative days) – the employee simply receives their agreed salary package per pay period and that remuneration is “all-encompassing”
Or: Explicitly mention in the Act that salary packages *are* subject to Holidays Act rules and may cause a variation in earnings.
=====================================
2. Extra Pay (bonus payments) that are paid irregularly, but form part of the employee’s liable remuneration (to which the Act applies)
a) Consider a quarterly sales bonus paid within 4 weeks – this has a major effect on any RDP calculations (and a lesser, acceptable, change to annual averages).
b) Consider excessive overtime earnings, say in a busy lead-up to Christmas, causes a major increase in the value of any sick, public etc leave paid within the next 4 weeks.
Both cases cause major distortions and unfair costs to the employer.
If the bonus had instead been paid out calculated per pay period, then you would have a fair basis for RDP calculation. However this isn’t feasible given that quarterly statistics might be involved in the calculation of the bonus payment.
For the overtime case above, it might at first seem reasonable to use the current RDP rules, however given that spikes in productivity may occur infrequently it would seem fairer to consider overtime earnings differently.
Suggestions:
===========
Treat Extra Pay earnings and overtime earnings as a separate component, averaged over a longer period (4 to 52 weeks would seem fair), which when added to ordinary+leave earnings over the last 4 weeks would produce an acceptable average for RDP calculations. The difficulty with this is that it’s a significant extra amount of work to calculate, it departs significantly from the relative simplicity of RDP, in that daily average values would be more complicated.
Or: Change RDP rules to use the annual average instead (which really would simplify things).
=====================================
3. A termination value may exceed the actual value of leave if it had accrued at anniversary.
For example, if an employee hasn’t yet completed 12 months service, their 8% valuation may exceed the value of 4 weeks annual leave. This is because 8% of 52 weeks comes to 4.16 weeks. So, an employee terminating the day before their anniversary is entitled to the equivalent of one extra day’s pay.
I don’t have a solution, other than possibly permitting constant leave accruals at 8% rather than insisting on weeks. This would be fair for both parties and easy to understand.
=====================================
4. Annual leave accrual in weeks
This is a major bone of contention, where employee’s expect 4 weeks on full pay, despite lacklustre performance and proof that annualised average earnings (and RDP earnings) may be less than the employee’s expectation.
We regard the average as being an acceptable rate of remuneration for annual leave, especially in the absence of a published roster for agreed hours of work. Most employers do not have rosters or publish them, merely an expectation that staff will present themselves and work for a nominal number of hours – it is therefore reasonable that employees should be remunerated for time based on their average if no published roster or agreed minimum number of hours of work is in place.
Suggestion: Implement the concept of “agreed minimum number of hours” as an adjunct or alternative to the current provision of “agreed value” for RDP and annual leave.
Also: Permit annual leave to be accrued on a percentage basis, rather than weeks – the results can be proven to be very different, however it’s easy to understand and easy to implement.
=====================================
5. Workplace absence, and it’s effect on annual leave accruals
It’s relatively common these days for staff to be absent for extended periods, through illness or personal reasons, armed forces, jury service, ACC, parental leave etc.
The Act provides for “anniversary date shifting” for extended periods of absence – the effect of which can be demonstrated (unendingly) to be equivalent to accruing annual leave on a percentage basis, rather than shifting the anniversary date.
We would like to see 8% accrual being a legal alternative to 4 weeks accrual. This is fair and understandable by both the employer and the employee.
=====================================
Now, on to the specific points that have been requested for commentary:
The calculation of relevant daily pay (RDP)
=====================================
1. Discuss any specific complexities and costs associated with calculating RDP.
A: see above
Also: RDP for pieceworkers is a mess! For example, being paid $10 per carton, then having to compare that with the minimum wage for the time it took to fill that carton is extremely complex. Pieceworkers should be able to be established under casual contracts, paid solely at piece rates, and have no further entitlements under the Act, other than receiving an 8% entitlement and 1.5 rates on Public Holidays.
=====================================
2. Is there an alternative calculation that would be easier to make without returning to the ordinary pay calculation under the Holidays Act 1981?
A: see above – use 52 week average instead to diminish effects of irregular bonus payments and excess overtime
=====================================
Trading the fourth week of annual leave for cash at the employee’s request
=====================================
3. What are your views on an employee and employer agreeing to trade the employee’s fourth week of annual leave (or some other part of the employee’s minimum annual leave entitlement) for cash?
A: definitely not – leave is necessary and should be considered a fundamental human right. If the employee wants to work whilst on holiday (even for the same employer, and get paid again for time worked), then that’s their prerogative, but the entitlement should never be able to be sold.
=====================================
4. Are there any specific issues, for example, criteria or costs and benefits that the Group should take into consideration?
=====================================
5. If you think an employer and an employee should be able to agree to trade the fourth week’s leave for cash, what protections do you see would be necessary to ensure entitlements are not reduced and employees’ choice to trade the fourth week is genuine?
=====================================
Allowing all employers and employees to agree to transfer the observance of a public holiday listed in the Act to another day
=====================================
6. What are your views on employees being able to transfer public holidays to another day, for example, observing Ramadan instead of Good Friday?
A: It is customary to observe the public holidays of the country you are employed in – not those of some other country or culture. So, no, public holidays should not be transferable.
he results of this will be carnage – an employee not normally working a Monday wants to transfer the public holiday to a day they do work etc. Bad idea.
=====================================
7. If you have done this previously have there been any issues with transferring?
=====================================
8. What protections do you see would be necessary to ensure entitlements are not reduced and employees’ choice to transfer the public holiday is genuine?
=====================================
The accumulation of alternative holidays (days in lieu)
9. What are your views on employees accumulating a number of days in lieu (alternative holidays)?
A: Works well, except *most* employers still accrue alternative leave to match the time worked on public holidays, instead of whole days…
=====================================
The treatment and entitlements of casual employees in relation to holidays and leave
=====================================
10. Discuss your understanding of what casual employees are entitled to under the Act.
A: Casual staff receive an annual leave component in every pay – be it a proportion (inclusive) of their remuneration, or an extra 8% calculation on base earnings. They also receive 1.5 rates for work on Public Holidays. No other entitlements (no sick, public etc).
However, this gets very murky where DOL deems casual agricultural workers entitled to public holidays during picking season because “they would have ordinarily worked that day” – so we have two conflicting rules for casual staff!
Suggestion: Casual staff should only be paid if they work.
=====================================
11. Discuss any complexities associated with calculating holiday and leave entitlements and payments for casual employees.
A: None – either 8% on top, or paid an inclusive rate (but $value clearly identified as a portion of their total remuneration).
=====================================
12. Do you have any examples of casual employees being advantaged or disadvantaged by the application of the Act?
A: Advantaged by DOL determination that a casual agricultural employee observing (not working) a public holiday falling on a normal picking day, should be paid, regardless of no work being performed. It is reasonable to pay 1.5 rates for work on the holiday – it is not reasonable to pay when casual staff are not working.
=====================================
Treatment of public holidays
=====================================
13. What are your views on the significance of the 11 public holidays listed in the Act? (These are: Christmas Day; Boxing Day; New Year’s Day; 2 January; Waitangi Day; Good Friday; Easter Monday; ANZAC Day; Queen’s Birthday; Labour Day; and Provincial Anniversary Day.)
A: Leave them alone
=====================================
Shop Trading on Easter Sunday and its interface with the Holidays Act 2003.
=====================================
14. Do you consider that Easter Sunday should be recognised as a public holiday?
A: No
=====================================
15. If so should it be “Mondayised” in the same way as, for example, Christmas Day is under the Act and replace Easter Monday as a public holiday?
A: No