The long-awaited Report of the Holidays Act Taskforce along with the New Zealand Government’s Response has now been published.
The Taskforce was established in 2018 to conduct a review of the Holidays Act and make recommendations for change. The Taskforce made 22 recommendations designed to address the challenges with the existing statutory framework of the Holidays Act.

The headline recommendations are set out below.

1. Annual leave entitlements should be calculated, taken, paid and held in weeks or portions of weeks.

2. Payment for annual leave should be calculated at the greater of:

• ‘Ordinary Leave Pay’ (base rate + scheduled overtime, allowance, commission and incentive payments); or
• average weekly pay for the last 13 weeks; or
• average weekly pay for the last 52 weeks.

3. The definition of ‘gross earnings’ for leave payment calculations should be simplified, and should include ‘all cash payments received except direct reimbursement for costs incurred’.

4. Family violence leave, bereavement leave, alternative holidays, public holidays, and sick leave (FBAPS) should continue to be held in days.

Payment for FBAPS should be calculated at the greater of:

• Ordinary Leave Pay; or
• average daily pay.

5. Eligible employees should be entitled to one day of sick leave from their commencement date, with an additional day per month of employment until the full entitlement of 5 days is reached after four months.

6. Eligible employees should be entitled to family violence leave and bereavement leave from their commencement date.

7. The list of people to whom bereavement leave applies should be extended.

8. The parental leave ‘override’ should be removed, so that any annual leave employees become entitled to while on parental leave would be paid at the same rate as other annual leave.

9. Employers should be required to provide payslips to employees in every pay period.

The recommendations do not contemplate a complete change to the provision of leave entitlements, such as using an hours-based accrual system. The Taskforce rejected this approach on the basis that it would unfairly disadvantage employees whose hours of work increased over the course of a year.
The Government has accepted all the recommended changes with minor adjustments and expects to introduce legislation in early 2022. For employers, implementing many of the recommendations will mean changes to payroll systems and compliance costs.

If you would like more detail on each of the Taskforce’s recommendations and the Government’s responses, a summary table is available here.