‘Nightmare’ holiday law overhaul
The ‘‘nightmare’’ law that could have led to millions of people not receiving proper holiday payments will be reviewed by a Government-appointed task force.
Workplace Relations Minister Iain Lees-Galloway announced a review of the Holidays Act yesterday.
His announcement comes after it was revealed thousands, if not millions, of part-time workers could be missing out on annualleave entitlements because of flawed payment calculations.
Unions said workers at restaurant chains, cinemas and security firms had been affected, with fastfood giants McDonald’s and Wendy’s having failed to pay all staff for working public holidays and to provide a lieu day.
There are two ways holiday pay can be calculated, either on the basis of ordinary weekly pay at the beginning of the holiday or by average weekly earnings over the previous 12 months. Employers must pay whatever gives the employee more money.
Lees-Galloway said New Zealand needed a law that provided certainty to employers and staff so they received their correct entitlements.
‘‘It’s clear we need to look at the Holidays Act with a fresh pair of eyes and ensure it is fit for modern workplaces and new working arrangements
‘‘The legislation needs to be straightforward and simple to implement, and deliver fair rest and entitlements for workers.’’
Because of an increasing variety of work patterns and pay arrangements, the law’s requirements were proving difficult and costly for employers to apply, and employees were not receiving their full entitlements, he said.
‘‘The time is now right to directly address the underlying issues with the act.’’
Lees-Galloway did not know how many workers had been affected by the law but it was wideranging. In 2016, a payroll expert said it could be as many as two million people.
The minister said he had been approached by BusinessNZ and the Council of Trade Unions to help tackle ‘‘this vexed and complex set of issues’’.
Past reviews had not been successful, in part due to an unwillingness of unions and business to work together.
Lees-Galloway, who announced the review backed by Council of Trade Unions president Richard Wagstaff and BusinessNZ’s John Milford, said he didn’t want to rush the year-long review.
It was a complicated law, and all parties wanted to simplify it, without either side losing out.
‘‘In the past, what has happened is there have been a series of compromises . . . Whereas, this time we are all starting from the same set of principles. We are all starting from the same place, and we all want to get to the same place. There is an opportunity . . . to once and for all get this right.’’
Lees-Galloway said the law changes would be implemented by 2020.
Wagstaff said the law was not delivering what both employers and employees were entitled to.
Last month, New Zealand Payroll Practitioners Association chief executive David Jenkins said the current law was ‘‘a nightmare’’, and the two-step calculation employers were expected to make with every employee, every time their hours changed, threw them off.
Employers who used a ‘‘set and forget’’ payroll system, calculating entitlements based on staff contracts, as opposed to their true earnings, ended up not paying their employees enough.
Meanwhile, Smoothpay Payroll managing director Matthew Gardner said up to two million Kiwis could be owed money due to the holiday pay botch-ups.
But Unite Union national director Mike Treen said he did not accept the calculation was complex or difficult to understand. ‘‘Businesses are taking the easy way out because of the confusing law and are systematically underpaying workers,’’ he said.
The working group will be chaired by Gordon Anderson, a Victoria University law professor with experience in employment law. The taskforce, which will include representatives from business, workers and the Government, will report back next year.