Employers back plan to replace Holidays Act, unions push back

Employers seem to be on board with the government's proposals to replace the Holidays Act, but unions and opposition parties fear they could trample workers' rights and entitlements.

Workplace Relations Minister Brooke van Velden announced the plan to make annual leave and sick leave pro-rated.

For every hour worked, employees would get a fraction of an hour of annual and sick leave. Those banked hours could then be used to take time off - again, measured in hours.

It means people could take only part of a day off if they get sick, or use a few hours of annual leave for recreation. Like van Velden, business groups say that's a fairer approach.

But unions argue the current availability of leave for part-time workers is no reason to take it away, and the new system could see workers' leave eaten up by doctors' visits and other life admin.

Business groups back simpler system

Employers and Manufacturers Association head of advocacy Alan McDonald said overall the new system would be largely cost neutral for businesses.

"I think the changes will go down pretty well with employers of all sizes, but especially the smaller ones. The Holidays Act as it stands has been hugely complex, it's been difficult to navigate, it's cost people in some cases tens of millions ... I think the minister and her team really need to be congratulated.

"Employees get entitlements from day one - which they don't do at the moment - and employers can look at it and go 'they're working X hours, they get Y holiday' and it just simplifies everything, it stops all these complex calculations."

He said the increased fee paid to casual workers - to replace any entitlement to leave - would be a cost for employers, but they would not have to deal with as much leave liability.

"Someone, for example, who works one shift a week - which it's more common than I thought actually ... with 43 and a half working weeks in a year, you get nearly a quarter of the year off on sick leave."

The shift away from providing leave to workers receiving ACC payments was common sense, he said.

"It does seem a bit of an anomaly when you're not working and you're getting paid a benefit that you also accrue holiday pay ... it's something I know that niggles away at employers."

The law is expected to pass sometime before the election, and employers would then have two years to shift over to the new system - with the exception of schools, which the Ministry of Education says will need five to 10 years to replace their current payroll system.

McDonald said the transition would have some costs but should be "reasonably straightforward" and "it's not as costly as paying six years back pay if you get it wrong".

Retail NZ chief executive Carolyn Young said they welcomed the government's plans, but were concerned about the increased cost of paying casual workers.

"Retail is a complex environment. It has really diverse working arrangements. Employees will work weekends, they work public holidays, they work in the evenings. So having leave accruing on an hourly basis is a much simpler calculation.

"In terms of the casuals, that will be a space that we'll have to consult with our members on to see how aligned they are with the new recommendations ... there's a lot of casuals that come in in that Christmas period, so making sure that it's still cost effective for business in that space will be really important for us."

She said if members found it too expensive, they may fight for a lower rate at select committee.

On the other had, the current sick leave entitlements for part timers was disproportionate.

"It's actually equitable that it's pro-rated because you're not at work all of the time that a full-time person's at work, and so therefore it plays out in a different way."

Sick leave and annual leave accumulating from a worker's start date would also be fairer and more flexible than the current system where they receive four weeks leave all at once after 12 months employment.

The change to ACC was a "difficult one", she said, but "from the perspective of fairness to a business who had to find someone to come in and replace you while you're not working, it's probably an equitable place to land".

Unions push back

E Tū union's national secretary Rachel Mackintosh argued against the claim that part-time workers would claim up to 10 weeks of sick leave.

"That's an extreme example and in fact most part-time workers work short days, so for most part-time workers 10 days' sick leave will be 10 shorter days - they're not getting anything special.

"That's really not the reality for most part time workers. Most part time workers are already disadvantaged, they have less income to spend on living and so the fact that some of them will get more sick leave than others is not a reason to deprive them of it."

She said there was also a risk the ability to take leave by the hour could see some businesses demanding workers take leave for things like doctors appointments.

"There is that risk that people don't get to spend their leave on what it's designed for which is rest and recreation ... to be required to take leave in that situation can disadvantage people from using leave for their holidays."

It was hard to predict whether that would be widespread, she said, but "if employers can see a way to reduce their liability - even if it disadvantages people in their life and in their ability to take leave for how it was intended - certainly some employers will do that".

The Minister, Brooke van Velden, even indicated to reporters that was likely.

"Not necessarily wanting to take a whole day off of annual leave to get a whole bunch of life admin done - you know, medical appointments, important things with their children, being able to take the time that you actually need, rather than more than is necessary - would be a huge win for workers," she said.

Council of Trade Unions president Richard Wagstaff welcomed the access to leave including bereavement and family violence leave from day one on the job, the boost to casual workers' loading, the changes to parental leave and mandatory pay statements.

But he said reforms should not result in a reduction in worker leave entitlements, and the reduction of sick leave for part time workers and holiday pay for those on commission broke an agreement reached between the last government, businesses and unions.

"It is good that the Act will be simplified but that didn't need to come at the expense of the hard-won entitlements of working people," he said.

Opposition parties warn of impacts on particular groups

Labour's Workplace Relations spokesperson Jan Tinetti also saw some positives and some negatives to the proposal, and said Māori and Pacific women were most likely to lose out.

"It's a mixed bag ... we'd started the review under our government to try and simplify the act and certainly like some of the things that have been announced here today, but I'm also really concerned that there are elements of these changes, such as the pro rating of sick leave, that go against the initial intent of the first review.

"More women will take up part-time positions because of other caring responsibilities that they have, so it will disproportionately fall on Māori [and] Pacific women who take insecure work and part-time work more so than any other demographic."

She said she would be asking questions of the minister "to ensure that we get this right".

"The bottom line is that nobody, nobody should be put it in a worse situation because they can't work full time or they are working part time - those are things that we need to ensure - that workers are at the heart of any changes that are made."

In an earlier statement, she claimed Prime Minister Christopher Luxon had "broken yet another election promise" to not cut sick leave.

A Labour party staffer later confirmed this was in reference to his promise not to reverse the wider increase to from five days sick leave to 10. Luxon's office did not respond to requests for comment.

Green Party Workplace Relations spokesperson Teanau Tuiono was also concerned about the effect of the changes for part-time workers.

"We're in the middle of a cost of living crisis. People are leaving the country because this government can't manage the economy, let alone everything else as well," he said.

"If you're a solo parent - and we know that disproportionately these are usually the mums - you're working part time, and that means if your kid is sick for one week, that's going to chew up your entire allowance.

"What makes sense is making sure that we can actually take care of everybody."

He said he would hope employers were mindful of their employees' needs, and would not demand workers use leave for things like doctors' appointments.

"That's an unreasonable expectation, and if they're going to ping people down to the hour I think we've really got to take a look at ourselves to be honest."

Pointing to the pay equity changes, WorkSafe refocus, the return of 90-day trials and recent strike action, he said he did not trust van Velden to have workers' interests at heart.

"I just can't, I don't trust Brooke van Velden as the person to be able to do that, we just need to look over the pattern of behaviour in terms of the stuff that they've brought through the house during their time in Parliament. None of it has been good for the workers, so for them to show up and go 'well actually this is going to be good for the workers' - I don't believe it.

"I don't believe that Brooke van Velden has got the workers at the heart of anything that she does, I don't believe that she can be trusted with workers' rights."

Brooke van Velden says she's tried to balance the rights of workers and employers.

Current system 'outdated, messy'

Lisa Quarrie, who owns and operates Hayes Common and Weave Eatery cafes in Hamilton, said the system was messy and difficult to use in hospitality.

"Annual leave is worked out in weeks and sick leave in days, bereavement after six months... so it's just really confusing for everyone," she told Morning Report.

"Hospitality staff don't generally work a tidy 40-hour week so it can be quite tricky to work out."

Quarrie said the hours-based approach would mean staff can work and take leave as they go, while seeing exactly what leave they have built up.

"I think it will take out a lot of the grey areas and headaches for operators," she said.

"People just wanted something that was more transparent and easier to work through, sometimes people can be worried that they are getting short-changed but really it's been that the system is far too complex, and I think that this is probably a bit fairer overall.

"Possibly there are some trade-offs on both sides but I think it will give us a system that works better for everyone," Quarrie said.

She said an overhaul had been a long time coming.

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