The Holidays Amendment Bill 2010 (195-1) was introduced on 16 August 2010. It seeks to implement many of the reforms proposed by the Ministerial Advisory Group, which sought public opinion on its preliminary proposals and reported back to the Government in January 2010.

The Minister of Labour, Kate Wilkinson, stated that, following its first reading (which is scheduled for 17 August 2010), the Bill would be referred to the Transport and Industrial Relations Select Committee. It would seem likely that this will not be for a lengthy period, in view of the extensive public consultation that has already been carried out.

With one exception, the provisions of the proposed Act would come into force on 1 April 2011. That exception pertains to a last-minute amendment made in response to the recent Employment Court case of NZ Amalgamated Engineering Printing and Manufacturing Union Inc v SCA Hygiene Australasia Ltd [2010] NZEmpC 73. This case found that employees had no statutory entitlement to public holidays during a Christmas-New Year closedown period at their place of employment. This amendment (cl 7(2) of the Bill) would ensure that employees would get four paid holidays in such cases by clarifying that an employee is entitled to be paid for public holidays, an alternative holiday, sick leave or bereavement leave falling during a closedown period if the day would otherwise be a working day for the employee. If passed, the change will take effect the day after Royal assent.

The other key aspects of the proposed legislation are set out below.

Payout of one week's minimum entitlement

An employee will be permitted to come to an agreement with his or her employer that the employer will pay out up to one week of an employee's minimum annual holiday entitlement in any one entitlement year. This would not affect current agreements that people may have to pay out entitlements above the minimum statutory entitlement of four weeks.

No agreement would be permitted in advance of the employee's entitlement arising.

There must be genuine agreement between employer and employee, and it can only be instigated by the employee. Employees cannot be pressured into requesting a payout and employers cannot be pressured to agree to a request. Employers can have policies to the effect that they do not have to consider a request for a payout.

To assist in the enforcement of employees' minimum entitlements to annual holidays, Labour Inspectors are to be accorded additional powers to bring an action for penalties relating to an employee's entitlement to and payment for holidays that are paid out. They will be able to determine the amount to be paid out and the portion of holidays to be paid out where there is disagreement as to what was agreed.

Employers' holiday and leave records will be required to record the portion of annual holidays paid out as well as the date and amount of payment.

Transfer of public holidays

These amendments would restore the ability of employers and employees to agree to transfer the observance of the whole of a public holiday to another working day to suit the operational needs of the employer or the individual needs of an employee.

Any agreement reached in this regard must be in writing and be "informed and voluntary", and the public holiday and the day to which it is to be transferred must be identified and otherwise be a working day for the employee. The purpose of the transfer must not be to avoid entitlements to time and a half and an alternative day for working on a public holiday, though that may be the effect of the transfer. Those entitlements will however apply if the employee works on the day to which the public holiday has been transferred.

The provisions relating to transfer of public holidays in the case of workers whose shifts straddle one or two days of public holiday have been retained with changes congruent with those relating to the transfer of whole public holidays.

The Bill proposes that if an employer and employee cannot agree on when an alternative holiday provided under s 56 is to be taken, the day must be taken on a day determined, on a reasonable basis, by the employer, who must give at least 14 days' notice. This section currently gives the choice to the employee, though it requires the employee to take account of the employer's view as to when it is convenient.

Employers' holiday and leave records will be required to record the day or part of any public holiday agreed to be transferred and the calendar day or period of 24 hours to which it has been transferred.

Proof of sickness or injury

It is proposed that employers be able to require proof of an employee's sickness or injury without having reasonable grounds to suspect that the sick leave is not genuine. The request for proof must still be made as early as possible and be accompanied by an agreement to meet the reasonable expenses of obtaining that proof.

Pay for public holidays, alternative holidays, sick leave and bereavement leave

The Bill attempts to introduce more clarity and fairness to the calculation of these types of leave. It provides for the payment of relevant daily pay (proposed s 9) or average daily pay (s 9A), the latter relating to situations where it is not possible to determine relevant daily pay or where the daily pay varies within the pay period when the holiday or leave falls. In providing the variable pay trigger, the legislation has made the use of the averaging formula more permissive. The average daily pay formula would replace the current four-week averaging formula currently provided in s 9(3) of the Holidays Act 2003 with a 52-week averaging formula.

Otherwise working day

Another factor has been added to the list by which what would otherwise be a working day is determined. This is "whether, but for the day being a public holiday, an alternative holiday, or a day on which the employee was on sick leave or bereavement leave, the employee would have worked on the day concerned."

Maximum penalties

Non-compliance with the Act is to be punishable with higher penalties. The penalties for both individuals and companies are to be doubled: $10,000 for individuals and $20,000 for companies.

"Discretionary payments" and "allowances"

A definition of discretionary payments is to be added to the Act to assist in the understanding of that term. A discretionary payment means payment of an amount that the employer is not bound under the employee's employment agreement to pay the employee, but does not include payment of an amount where the amount is discretionary but the payment itself is provided for in the agreement.

"Gross earnings" in the Act includes allowances, but for clarity this is to specifically exclude non-taxable payments to reimburse the employee for costs incurred by the employee related to his or her employment.

(SOURCE: CCH, retrieved 17th August 2010)