Gerrad Brimble, Geoff Bevan

Earlier this year the Government established a Holidays Act Taskforce to review and make recommendations about the Holidays Act 2003 (the Act). The Taskforce released an issues paper in late August setting out its various observations about the current state of the law around holidays. Submissions on the paper closed on 12 October 2018, and the Taskforce is now considering submissions received. It intends to report back to the Government with recommendations by mid-2019.

The Taksforce paper identifies that the current holidays regime can be difficult to both understand and to apply, particularly where non-standard work arrangements are involved. That complexity has led to widespread non-compliance and many employees not receiving their legal entitlements. Remediating historical non-compliance and ensuring ongoing compliance with the Act can also be expensive and time consuming for employers.

The aim of the Taskforce is to make recommendations to the Government that will help to simplify the administration of holidays entitlements, provide greater certainty and clarity for both employees and employers, and protect employees entitlements.

Key issues identified by the paper include:

• A lack of prescriptive guidance can make the Act hard to implement. Parties may need to exercise judgment, consult and agree on how entitlements should be paid. Parties may not always agree, or agreement may not always be sought.
• It is not always clear what payments are to be included in “gross earnings”.
• Complexity around providing correct entitlements when an employee’s work pattern changes.
• Defining terms such as “otherwise working day” and “ordinary working week”.
• Determining which averaging formula (e.g. for Relevant Daily Pay, Average Daily Pay, Average Weekly Earnings or Ordinary Weekly Pay) should be used, and when.
• How to deal with sick leave and bereavement leave entitlements during a period of annual holidays.
• Payroll systems not being compliant with the Act (e.g. calculating entitlements in hours instead of weeks or days).
• How to deal with leave entitlements in a sale / transfer of a business.
• Defining a “week” and “Ordinary Weekly Pay” for annual holidays purposes.
• When payas-you-go holiday pay can be paid.
• Determining public holidays entitlements.
• Various other vagaries, inconsistencies and complexities that create challenges for payroll and contribute to noncompliance issues.

It is unlikely there will be any changes to the current Act until at least late 2019 at the earliest (but probably later). In the meantime employers are still expected to comply with their legal obligations and to ensure that employees receive their legal holiday entitlements. Failure to comply with legal obligations risks claims for arrears, and potential penalties for breach of the Act. With a six year limitation period on arrears claims and penalties of $20,000 per breach for an organisation ($10,000 per breach for an individual), liabilities have the potential to be significant.

If you have questions about your Holidays Act obligations or entitlements, contact our employment law team.

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