Holiday legislation is too complicated

Businesses are still complaining about the complexities of the 2003 Holidays Act, with good reason.

The Act was well intentioned and is fine for employees with regular work patterns, but it can be horrible dealing people who have variable or changed work patterns and payments.

Attempts have been made to address the obvious shortcomings but the National led government put it in the too hard basket, ridiculous for a party that claims to support businesses.

RNZ: Holiday legislation ‘too complicated’

A survey from the law firm Simpson Grierson found nine out of 10 firms placed simplifying the Act at the top of their employment wishlist.

That doesn’t surprise me. I deal with a number of companies running payrolls and holiday payments and accruals are major causes of confusion and difficulties.

David Jenkins from the Payroll Practitioners Association said the legislation was messy, and hard for employers to get their heads around.

“The only way to be compliant with the Act is to constantly watch, monitor and change settings in your payroll system. It’s way over the top in regards to compliance.”

Employers’ main concern is how the Act calculates annual leave, public holidays, sick days, and bereavement leave.

With the rise of part-time and casual work, they say the Act makes it near-impossible to accurately figure out how much workers are owed when they take leave.

It isn’t impossible but it can be very difficult, and it can also come up with some ridiculous calculations, especially with holiday pay.

David Jenkins said there was a lack of clarity, and the legislation – which should help employers – actually hindered them.

The provision in the Act for four weeks holiday after 12 months continuous employment was straightforward for those who work the same hours every week, he said. “But as soon as I get someone that works different hours week after week, when they get to 12 months you get four weeks of…what? That’s the problem – the Act can’t help you define what a week is.”

Some employees don’t work some weeks, and work anywhere from a day to seven days a week at other times. If they take a week holiday how many days should they be paid for?

It’s worse if they take a day off, and some awards and employments allow them to take part days or hours off, and that can be diabolical trying to work out what to pay them.

It’s not just small businesses that have had problems.

Since 2012, the Labour Inspectorate has been investigating some of the country’s biggest employers to make sure they’re complying with the Act.

Of the 118 completed investigations, 37 organisations – about a third – have had to pay arrears, to the tune of at least $43 million.

Prior to that I complained to a major employer who was not calculating holidays correctly, and they had a lawyer supporting their position.

But Council of Trade Unions’ president Richard Wagstaff said it employers should figure out their obligations rather than complain the legislation was flawed.

“The big problem here is the fact that employers haven’t done enough to apply the current Act, and to quickly call for a change to that when they know they’ve been caught short doesn’t seem right to us.”

Wagstaff is either way out of touch, or is deliberately trying to play down the problems.

If calculated ‘correctly’ employees with variable work patterns can be advantaged as they get the highest of two calculations. One of those calculations is their last 4 week average pay rate.

If, for example, an employee works an average of say 10 hours a week for most of the year, then works 40 hours a week for a few weeks over Christmas, the timing of when they take holidays can make a big difference to the calculation.

The holiday pay law is definitely an ass, and this became apparent fairly quickly after it came into force in 2004. Businesses still have trouble with it, because in some situations it is unworkable.

Governments since then have ignored numerous pleas to fix it. That is a disgraceful abrogation of responsibility.

There is a reason people keep complaining about the act – in some respects it is crap.

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