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Improving Holidays Act compliance

Work is underway at the Ministry of Business, Innovation and Employment (MBIE) to address problems related to compliance with the Holidays Act 2003 (the Act).

Including developing guidance intended to help employers and employees in applying aspects of the Act.

MBIE is working with the recently established Payroll System Functionality (PSF) group to develop the guidance. The group was established by MBIE and comprises MBIE; payroll system providers; professional service providers; and a payroll practitioner body. The guidance is expected to be released for consultation in 2017.

MBIE Payroll Lead Tania Donaldson says areas of focus explored so far include defining “what is a week” for annual leave purposes, and gross earnings.

"The guidance will be just that; guidance only and not legal advice, but it will aim to provide a range of scenarios to make sure it is useful for as many people and situations as possible.

"The PSF group have been integral to identifying areas of concern and creating the scenarios that will help people to comply with the Act. We have also invited the Council of Trade Unions, Business New Zealand and the State Services Commission to one of our meetings to hear their views,” says Ms Donaldson.

MYOB Strategic Program Manager and Chair of the PSF workgroup Scott Gardiner says the group is pleased to support MBIE in addressing Holidays Act compliance and that the group would continue to support MBIE in developing the guidance.

"It’s well known that Holidays Act compliance is difficult for many businesses. There are differing interpretations of the Act that affect how organisations calculate leave balances.

“The guidance will help payroll providers offer more certainty to organisations using payroll software to pay their employees.

“The guidance should help clear up ambiguity about what should be included when holiday entitlements are calculated. The key to this will be in gaining feedback from those likely to be using it.

The ultimate goal is to make sure New Zealand organisations can confidently run their payroll and employees can be assured that they are getting their correct Holidays Act entitlements,” says Mr Gardiner.

The guidance is expected to be finalised in 2017.