Holiday’s Act – What is it and how will it impact you?

The Holidays Act 2003 covers pay and entitlements for employees in New Zealand about all types of leave and public holidays. For those employees who work shift work, variable days and hours, or with flexible work patterns including RMOs, calculating holiday pay has been more complex.

This has resulted in widespread non-compliance. Essentially, employers (not just limited to DHBs) have unintentionally been underpaying or overpaying staff what they’re entitled to.

The areas requiring remediation date back to 1 May 2010. The issues mostly relate to the payment of statutory holidays, annual, sick and bereavement leave.

In late 2016, DHB chief executives agreed to establish a national process to respond to concerns raised by the Council of Trade Unions (CTU), around levels of compliance of DHB payroll systems with the Holidays Act 2003.

Since then, there has been a lot of work done to develop a national process, and work is still ongoing to develop and agree a national interpretation of the Act for all DHBs to adhere to. For RMOs there is the added complexity around Annual leave. RMOs are unique in that the MECAs to date have allowed for the transfer of Annual leave between DHBs, however while complying with the MECA, the view of the labour inspectorate is that this was actually uncompliant resulting in additional complexities throughout this project.

The process
Each DHB has been working through three main phases, and each are at different stages in their projects.

Step 1 - Review: Audit processed were undertaken which identified the key areas of Holidays Act non-compliance. Many DHBs employed independent auditors like Ernst & Young to complete these.

Step 2 -Rectification: As a result of the reviews, this phase looks at what changes need to be made to ensure all system/s, policies and processes are compliant, and that DHBs pay their employees correctly going forward.

Step 3 - Remediation: This stage is about calculating and paying anything that is owed to current and former employees arising from any identified areas of non-compliance, back as far as 1st May 2010. It should be noted that some employees may have been underpaid – and some may not. Not everyone will be owed money. 

All stages of this project have been done in conjunction with the health unions, and STONZ is also part of the National Holiday Acts Working Group which was established to ensure there is agreement between all parties on the new interpretation of the Act before any remediation is undertaken.

What does this mean for you?
At the moment, you do not need to do anything as the projects are still ongoing. Some of the smaller, regional DHBs are getting closer to completion so you may be contacted in the coming months if you have worked there previously.

DHBs must be signed off via the Assurance framework (developed by KPMG), before any funds will be released so there are still some key milestones to meet before any money is paid. If you have worked for other DHBs previously, then you should be on their payroll records, and therefore on the list of employees to review and remediate. When DHBs are in a position to start making payments we’ll get back in touch to update you further.

If you have any questions in the meantime, please don’t hesitate to get in touch with our team.


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