Government seeks business feedback on Holidays Act changes

Published 6 June 2024 | 2 min read

NZ businesses have long grappled with the Holidays Act 2003. The complex calculations required for annual leave and entitlements pose significant compliance challenges, especially for smaller businesses without advanced payroll systems. This complexity increases administrative burdens and costs.

Recent changes, such as doubling sick leave entitlements from five to 10 days for all eligible workers, have added to the difficulties. Businesses, particularly those with many part-time workers, face increased compliance costs and staffing challenges.

Proposed reforms

To address these issues, the Government will release a draft of proposed changes to the Holidays Act in September 2024. These changes aim to simplify the Act and reduce the compliance burden on businesses. The Government is seeking feedback from businesses to ensure the reforms are practical and effective.

Benefits of the proposed changes

The proposed shift from an entitlement system to an accrual system for annual leave promises to simplify calculations and reduce compliance costs. Additionally, a new approach to pro-rating sick leave based on actual hours worked aims to better support part-time employees and their employers.

How to get involved

Businesses are encouraged to participate in the consultation process by providing feedback on the exposure draft. This input is crucial for shaping a more practical and efficient Holidays Act. Interested businesses can register their interest with the Ministry of Business, Innovation and Employment (MBIE).

More information here.

By engaging in this process, businesses can help create a more manageable and cost-effective system for employee entitlements.