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Part-Time Workers Could Get Less Sick Leave Under Law Change

Workplace Relations and Safety Minister Brooke van Velden Photo: RNZ / Angus Dreaver

Part-time workers could end up with less sick leave in an update of the Holidays Act announced by the Workplace Relations Minister.

The draft legislation will be released ahead of targeted consultation in September.

Van Velden announced the move in a speech at the Pacific Economic Development Agency in Auckland.

She said she had heard from businesses who were struggling to adjust to the previous government's decision to double sick leave entitlements from five to 10 days, which took effect in 2021.

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She said changes in the draft bill could include pro-rating sick leave "to better reflect how much an employee works".

"Workplaces that rely on part-time workers are particularly vulnerable to unexpected staffing shortages," she said.

This would mean the amount of sick leave workers were entitled to would depend on how much they worked - leaving part-time workers with less.

"This means in an employee works a full work week, they will receive 10 days sick leave. An employee who works fewer hours will receive a proportion of that entitlement. What that proportion looks like will form part of our consultation."

She said she had heard of one case where a person worked two jobs part time, so was entitled to 20 days sick leave when most full-time workers were only entitled to 10.

"It would become proportional to the hours that you've been working, rather than having people entitled to more than a full-time worker."

She said everything was on the table as part of the consultation.

"But we're opening up that conversation for will this change be simple enough, will the complexity be reduced, and how do we get that balance right between what we've currently got verus a simpler law which will make it easier for businesses to comply - which will benefit worker at the end of the day".

The coalition was also considering shifting annual leave to an accrual system, providing annual leave entitlements in line with how much a worker was working - a move she said was "just common sense".

"While workers might not notice any change in their entitlements, from a payroll perspective this should make a huge difference. An accrual system should help avoid the complex calculations that regularly stump payroll software and should therefore reduce compliance costs for employers."

Deputy leader of ACT Brooke van Velden


Consultation would be targeted to stakeholder groups, who were encouraged to register their interest with the Ministry of Business, Innovation and Employment (MBIE).

Van Velden said MBIE would select a "representative sample of organisations and individuals to consult with" based on their expertise in implementing payroll and business systems, or understanding of the effects of the Act on employers or employees.

"I believe it is important to hear from small businesses in particular, given small businesses will adopt a range of working arrangements and often do not have the same payroll infrastructure as larger organisations," she said.

"We need the Act to be workable for everyone: from the multinational corporates right down to the small town family-run business.

"Change has been a long time coming, and I know there are many who are frustrated with the Holidays Act. We need an Act that businesses can implement, and that makes it easy for workers to understand their entitlements. We need to do this once and do it right."

The Holidays Act has been beset by problems since it came into force in 2004, with hundreds of thousands of people receiving too little holiday pay due to miscalculations under the complicated law in recent years.

The problems mostly come from the requirement that workers be entitled to holiday pay amounting to the higher of two options: their ordinary weekly pay or an average over 12 months.

Labour set up a taskforce to tackle the payroll problems in 2018, but failed to introduce legislation on it before being relegated to opposition in last year's election.

Van Velden in March promised to find solutions to the problem, identifying it as one of her top priorities - starting with considering the changes Labour had proposed.

She said the coalition was taking on some of the technical changes the previous government proposed "to ensure that we're going to meet our deadline of getting it done by the end of term".

She was not considering a reduction of the number of public holidays, she said.

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