David Farrar: Pro-worker changes to Holidays Act

Labour, Greens and the media would have you believe the changes to Holidays Act are some sort of assault on workers. In fact, they generally improve things for employees. The CTU, to be fair, has been quite balanced with their comments – unlike the hysteria from Labour and Greens.

The case for change is massive. The current holidays law are so complex that I doubt a single major employer in NZ has managed to implement them correctly. None of the payroll providers can program software to cope with them. The status quo is absolutely indefensible.

Now what are the major changes that improve things for workers. Here’s a few:

• Annual leave entitlement starts from beginning of job, instead of after 12 months

• Sick leave entitlement starts from beginning of job, instead of after six months

• Bereavement and family leave entitlements starts from beginning of job, instead of after six months

• Casual workers get 12.5% leave payment on top of hourly rate, instead of current 8% and sick leave eligibility (which in practice is never claimed)

That last one is quite huge. All casual workers are going to effectively get a 4.5% pay increase. They are going to paid 100% of a sick leave entitlement, even if never sick.

Labour and Greens are complaining because sick leave will now be pro-rata to hours, the same as annual leave. They think it is fair that someone who works 5 hours a week should get 80 hours of sick leave entitlement (equal to 16 weeks), the same as a 40 hour a week worker.

The new proposed law is simple and Brooke van Velden has done a great job is making it so. In future the calculations are simply:

• Annual leave is calculated at 4/52 of each hour worked. So every 52 hours worked gets you four hours of annual leave.

• Sick leave is calculated at a maximum of 2/52 of each hour worked. So every 52 hours worked gets you two hours of sick leave. This caps out at 160 hours or 20 days

• Casual employees will get a 12.5% leave compensation payment in lieu of leave.

• Employees who work hours in excess of their contract get the 12.5% leave compensation payment also

The vast majority of employees will all benefit from this new system. Employers will also welcome it, even though it may increase costs for casual workers. The simplicity is worth it.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders