Changes coming to employee leave entitlements...

The Government has announced a proposal to overhaul the current leave entitlements employees have in New Zealand. This proposal would affect an employee’s entitlement to:

• Annual leave;
• Sick leave;
• Family violence leave;
• Bereavement leave; and
• In the case of a casual employee, their entitlement to pay-as-you-go payments.

Annual Leave

Currently, an employee is entitled to four weeks of annual leave per year. This entitlement begins after an employee has worked for an employer continuously for a year. 

Under the new scheme, an employee will accrue annual leave based on their hours worked. The proposed rate at which an employee would accrue annual leave is 0.0769 hours of annual leave per hour worked. This equates to four weeks of annual leave per year for an employee working 40 hours per week.

Whilst this may not affect full-time employees, it will reduce a part-time employee’s annual leave entitlement to reflect the number of hours they work.

Sick Leave

Employees are currently entitled to 10 sick days a year after 6 months of continuous employment. 

Similarly to the changes for annual leave accrual, sick leave would accrue based on the number of hours worked by an employee. The rate of accrual for sick leave is proposed to be 0.0385 sick leave hours per hour of work.

Again, this would not impact full-time employees as this rate of accrual is the equivalent of 10 days of sick leave per year. This change will, however, impact part-time employees, whose sick leave entitlements will now reflect their hours worked.

Family Violence and Bereavement Leave

Currently, employees are eligible for family violence and bereavement leave after they have been employed for 6 months continuously. Employees are entitled to 10 days of family violence leave per year, and up to 3 days of bereavement leave upon the passing away of a direct family relation, or 1 day upon the passing of another person significant to them.

Under the new scheme employees will be entitled to the same number of days of family violence and bereavement leave but will be entitled to this leave upon the commencement of an employment relationship, rather than after 6 months as is currently the case.

Casual employees

Casual employees are currently entitled to both annual leave and sick leave if they meet the eligibility requirements as stated above (12 months of continuous employment for annual leave and 6 months of continuous employment for sick leave). In certain circumstances and upon agreement between a casual employee and an employer, it can be agreed that an employee receives 8% of their gross earnings in addition to their pay in substitution of their annual leave entitlements. This is known as pay-as-you-go.

Under the new scheme casual employees who are not eligible for annual leave or sick leave will receive a blanket payment of 12.5% on top of their wages to compensate for their lack of leave entitlement. This will be known as a Leave Compensation Payment.

If there is confusion about an employee’s entitlements, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.