The proposed sick leave changes passed their final reading in Parliament last week. The Holidays Amendment Act 2021 will now come into force on 24th July 2021 which will amend the provision of the Holidays Act 2003.
This is the Act that increases sick leave available to employees from 5 to 10 days per year. The maximum amount of sick leave that your employee can hold as unused remains at 20 days, but the Act reduces the amount of unused sick leave that can be carried over each year, from 15 days down to 10.
No matter whether you think this change is right or wrong we all need to get on board and be prepared for the changes that take effect from 24th July 2021. As a matter of interest, I’m not against the change itself but I am against the timing of bringing it in. It certainly feels like employers are getting slammed with ever increasing cost over the last couple of years with minimum wage increases, additional stat holidays and now additional sick leave. Most employers do the right thing by their employees anyway, but I know – get over it and move on!! Done – just sharing my view.
Apart from the additional cost there is also the compliance component that you need to ensure you are all over. The change takes effect on your employees next sick leave anniversary (their 6-month anniversary for most contracts). So, for those 6-month anniversaries that are after the 24th July the next sick leave allocation will be for 10 days.
Take for example an employee who started work on 11th January 2021. Their sick leave entitlement is due to them on 11th July – this is before the change takes effect and so the allocation is still for 5 days. However, someone who began employment on 1st February 2021 will have their anniversary on 1st August and so will receive 10 days sick leave in that allocation.
Additionally, Employers should ensure that all their employment agreements, policies and any other documentation will remain complaint with the upcoming changes.
Lastly, there is the software component, compliance within your payroll software. This is something that should take effect with a software update but will still need interpretation to ensure your employees allocation is correct.
As always, if you have any queries or just want to chat about this and how it will affect your business, please feel free to reach out by emailing me on Sue@3rdArmAdmin.co.nz or give us a call on 04 232 9199, or fill in your details below and we will be in touch.