The announcement by the Labour Government over the weekend that it plans to simplify the Holidays Act if re-elected provides a glimmer of hope for employers, employees and unions battling with the complexity of the current legislation.

However we note that this has been on the agenda since soon after the last election. A Holidays Act Taskforce was estalished by the Government in May 2018, and it has apparently delivered its recommendations to the Minister of Workplace Relations and Safety. However no report has been released. This reform is well overdue, and reflects the results of our recent client survey which ranked simplification of the Holidays Act as the top employment law election priority (see results here).  

In the meantime, our five suggested key priorities for the incoming Government to simplify the Act are:

1. One formula to calculate all types of leave (rather than the current four).
2. The ability to accrue and calculate leave entitlements in the unit that best suits the workplace. In particular, to do so in hours which reflects the vast majority of current payroll systems.
3. Allow employers and senior executives to agree that bonus/incentive payments can be excluded from holiday pay calculations.
4. Overturn the Metropolitan Glass & Glazing Limited case from April 2020 in relation to the requirements for closedowns for those who don’t have an entitlement to leave. This case is presenting significant practical difficulties for employers as they prepare for upcoming Christmas closedowns.
5. Expressly allow employees to transfer annual leave entitlements to a new employing entity rather than needing to pay this out (eg where a company is sold or employees are transferred to another entity within a group).

In due course, we encourage employers to make submissions on any Holidays Act amendment bill to ensure that there is an overhaul of the current outdated and complex legislation.