Is it time to repeal the Holidays Act?

Simpson Grierson is calling for a closer look at the Holidays Act 2003, calling it outdated and overly complex

It’s time for a repeal of the Holidays Act 2003, according to Simpson Grierson. A survey conducted by the firm, which draws on the responses of 196 HR specialists across a number of industries, shows a purported disconnect between the legislation and today’s employment realities.

The Holidays Act was originally drafted in 1981, a time when Simpson Grierson partner Phillipa Muir and senior associate, Rebecca Rendle, argue most businesses were closed on weekends and “a nine-to-five Monday to Friday work week was the norm”.

“We regularly receive feedback from employers that the Holiday Act is overly complex and no longer fits with the many and varied work patterns now in place,” say Muir and Rendle.

As a result of the survey, the firm recommends amending two key areas of the Act in order to make it simpler to apply and to provide clarity. These include:
  • One formula for payment of all types of leave (instead of the current four formulas); and
  • Accrual and payment of all leave in hours (rather than weeks for annual leave and days for everything else).
Of respondents, 82 indicated that they find the Holidays Act difficult or very difficult to apply, while only 38 find it easy or very easy.

“It works for people who work Monday to Friday and get paid an annual salary. For everybody else, it is difficult,” wrote one respondent.

Furthermore, most respondents (72%) reported already operating under a payroll system where leave is determined by hours, which is inconsistent with the Act. Muir and Rendle say this adds an extra layer of complexity around how calculations are made and the potential for error.

“While a work day or a work week may vary greatly between workplaces and between employers, a work hour is the same for everyone,” they note.

Other key complaints included the fact that there is no common approach on whether bonus/incentive payments are included in the holiday pay calculations, and that some employees taking parental leave may be at a disadvantage when it comes to holidays during the first year of their return to work.

“It is unfair for women returning to the workplace after taking parental leave, in that any holidays are calculated on the previous year’s earnings (which are zilch given [they] have been on leave),” wrote one respondent. “Therefore this penalises women who need to take leave (sick or holiday) to care for children upon their return to the workplace.”

Muir and Rendle say they hope the survey serves as a launch pad for wider discussion around the Act going forward.

“We hope the results of this survey will be a starting point for change and a wider review of how the Holidays Act can better accommodate 2014 workplaces and work patterns,” they say. “Based on these survey results, in our view, a re-write is needed.”

Do you agree that a repeal of the Holidays Act 2003 is needed? Tell us your opinion in the comment box below.

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