The proposed Employment Leave Bill will replace the Holidays Act 2003. Once the Bill is passed, there will be a 24-month transition period to allow employers to make the necessary changes to Employment Agreements and pay-roll systems.
Below is a summary of the key proposed changes.
Hours-based leave accrual
Annual leave and sick leave entitlements will be calculated using an “hours worked” accrual model. Annual leave will accrue at a rate of 0.0769 hours per contracted hour worked. Sick leave will accrue at a rate of 0.00385 per contracted hour worked up to a maximum of 160 hours. Employees will be able to use accrued leave in hourly increments, offering greater flexibility for partial days off.
The above entitlements can be used from day-one of employment. This also applies to bereavement and family violence leave entitlements.
The change to sick leave entitlements will particularly affect part time employees who currently receive a 10-day sick leave entitlement regardless of hours or days worked.
Payment of Leave
All leave will be calculated based on remuneration plus fixed allowances only. Leave will be “banked” in hours which means balances will remain unaffected by changes in working patterns.
Cashing-up leave
Employees will be able to “cash up” 25% of their total annual leave balance in each 12-month period (as opposed to the current one-week maximum limit).
Casual Workers
Casual workers will receive a “leave compensation payment”. They will receive 12.5% of each hour worked in lieu of annual and sick leave accrual.
Parental Leave
Annual leave taken after returning from parental leave will now be paid at the employee’s normal rate, rather than the reduced rate that can apply under the current rules.
Until the Holidays Act is repealed and the Employment Leave Act comes into force the current rules still apply, and employers need to ensure they are providing correct entitlements and payments to employees. If you have any questions about the proposed reforms or need guidance on how they may impact your business, please don’t hesitate to contact one of our team at Harmans Lawyers.
