In yesterday’s press release from the Minister for Workplace Relations and Safety, the Government provided an update regarding the ongoing Holidays Act 2003 (Act) reform. A draft of the Bill, which will set out the new Government’s proposed changes to the Act, will be released for targeted consultation in September 2024. The proposed changes aim to improve the workability of the current legislation and make entitlements clearer for employers and employees.

The Minister has advised that some of the key changes employers can expect to see in the draft Bill include:

• Moving from a weeks-based entitlement system to a weeks-based accrual system of annual leave. The Government says this change is intended to avoid the complex calculation currently required under the Act, which can often be incompatible with payroll software.
• Pro-rating sick leave. This would mean, for example, that employees who work 20 hours a week would be entitled to five days a year, while full-time employees would continue to be entitled to the usual 10 days.
• Introducing more simple methodologies for calculating use of leave that do not require pay systems to access data about daily hours of work.
• Introducing objective criteria for using pay-as-you-go for annual leave. This will primarily impact employers who regularly engage casual employees that are paid 8% holiday pay on top of their usual pay.
• Clarification that only full pay periods need to be included in 13-week reference periods (which would be used for calculating average weekly pay for annual holiday calculations).

Employers and members of the public can register their interest to be part of the target consultation on the Bill through the Ministry of Business, Innovation and Employments website. If you would like to be part of this consultation, you must register by 8 July 2024. After consultation, the Government will then consider whether any other changes are required, before introducing a Bill to Parliament.

If you have any questions about what this may mean for your business, or if you would like assistance preparing your organisation’s submissions on the draft Bill, please contact our specialist Employment team. Otherwise, watch this space regarding further developments.