Sunday 4 November 2001

Labour Minister Margaret Wilson says a report on the Holidays Act from a joint union-employer advisory group will allow good progress to be made on a "complex and difficult" area of employment relationships.

Issues covered in the report include payment for work on public holidays, the "Mondayisation" of holidays, rates of pay for working on holidays, clarity on the observance of Waitangi and Anzac days, the use of special leave and under what circumstances employees can be required to take leave, or accumulate leave.

"Last year there were more than 60,000 thousand calls to the Employment Relations Service from employers and employees about the Holidays Act. There’s an obvious need for change. The report clarifies the issues, makes the positions of employers and unions clear and makes policy recommendations for government consideration," said Margaret Wilson.

The group has also considered whether there should be an increase in general annual leave entitlement. The employer representatives thought the present situation should be maintained; unions sought an increase to four weeks.

"The Advisory Group has simply recorded the known positions of unions and employers; the government has yet to consider this issue," said Margaret Wilson.

Margaret Wilson thanked the Group and its chair, Peter Chemis of Buddle Findlay.

"A close reading of the report shows that a great deal of hard work and creative thought and compromise has gone into the group's deliberations," said Margaret Wilson. The work done by the group now allows the government to do its job and produce clear, fair and effective policy decisions and legislation for holidays. That work is already underway and I hope to be able to take policy to Cabinet before Christmas and introduce legislation next year".

Ends

SECOND
REPORT OF THE

HOLIDAYS ACT
ADVISORY GROUP

TO THE MINISTER OF LABOUR

SEPTEMBER 2001

17 September, 2001
TABLE OF CONTENTS

1. INTRODUCTION 1

2. STRUCTURE OF THE REPORT 1

3. JURY SERVICE 1

4. PUBLIC HOLIDAYS 2
4.1 Should an employee get a paid public holiday regardless of whether the public holiday falls on a day that would otherwise be a working day for the employee? 2
4.2 What mechanism should govern the days on which the 11 public holidays are observed? 2
4.3 Should the observance of the Christmas and New Year public holidays be automatically transferred into the Monday to Friday working week when those days fall in the weekend (i.e. "Mondayised")? 2
4.4 Should an employer and employee be able to agree to observe Waitangi Day and/or ANZAC Day on alternative days? 3
4.5 Where an employee works on Waitangi Day or ANZAC Day, should the employee's entitlement to a day in lieu be lost if the employer pays the employee more than ordinary rates of pay? 3
4.6 What rate of pay should an employee be paid for a public holiday (where the employee does not work on that public holiday)? 3
4.7 When should an employee be paid for a public holiday? 4
4.8 What rate of pay should an employee be paid for working on a public holiday (in addition to a day in lieu)? 4
4.9 Should an employee who works on a public holiday, but who cannot show that it would otherwise be a working day, be entitled to a day in lieu? 4
4.10 If an employee works on any part of a public holiday should he or she be entitled to a day in lieu? 4
4.11 Should an employee who is on-call on a public holiday but who is not called out be entitled to a day in lieu? 5
4.12 Who should determine when a day in lieu is taken? 5
4.13 Should days in lieu accumulate if not taken within a specified period of time of them accruing? 6
4.14 Should the time period that an employee takes off on a day in lieu reflect the actual time period worked on the public holiday? 6
4.15 What rate of pay should an employee be paid for a day in lieu? 6
4.16 When should an employee be paid for a day in lieu? 7
4.17 What provision should be made for days in lieu not taken upon termination of employment? 7
4.18 Should all employees, regardless of where they are employed, be covered by the same rules, or should the provisions dealing separately with employees employed in a "factory" or "undertaking" remain as they presently stand? 7

5. ANNUAL HOLIDAYS 9
5.1 Should there be any change to the current entitlement of 3 weeks annual holidays? 9
5.2 Should the entitlement to annual holidays be based on "weeks" or should some other basis be used? 9
5.3 Should there be a qualifying period before an employee becomes entitled to annual holidays and if so, what period? 9
5.4 Should provision be made to ensure that an employee is able to take a portion of his or her entitlement to annual holidays in one block? 9
5.5 Should an employee be required to take annual holidays within a specified time of them accruing and if so, should the employee forfeit those annual holidays not taken? 9
5.6 What period of notice should be given when an employer requires an employee to take annual holidays at a particular time? 10
5.7 Should restrictions be placed on an employer's ability to cancel an employee's annual holidays? 10
5.8 How should periods of authorised unpaid leave (including parental leave, personal leave, ACC and sick leave) affect the entitlement to annual holidays? 10
5.9 How should annual holiday pay be calculated in various circumstances? 11
5.10 Should annual holiday pay be allowed to be paid to an employee periodically in advance rather than at the time of taking the annual holiday and if so, in what circumstances? 11
5.11 Should the provisions that contemplate an employer's ability to closedown its business be continued and if so, should they be changed? 13
5.12 Should an employer be able to require an employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement to take the period off work as annual holidays? 13
5.13 Should an employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement be able to request, and his or her employer be able to allow the employee, to take the period off work as annual holidays? 14
5.14 Should an employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement while on annual holidays be able to take that period as special leave? 14
5.15 Where an employment relationship is terminated and annual holidays are owing, should the employment relationship cease at the date of termination, or should it be deemed to continue until the annual holidays expire? 14
5.16 On termination of employment, should an employee be paid for a public holiday which falls during the period of any unused annual holidays added to the date of termination? 14

6. SPECIAL LEAVE 15
6.1 Should there be any increase to the current entitlement of 5 days special leave? 15
6.2 Should the entitlement to special leave be split up into types of leave such as sick leave, domestic leave and/or bereavement leave (or Tangihanga leave) with separate entitlements for each? 15
6.3 Should the entitlement to special leave be expressed in "days" or "week(s)"? 15
6.4 Should there be a qualifying period before an employee is entitled to special leave and if so, what period? 15
6.5 On what grounds should an employee be entitled to take special leave? 15
6.6 Within what period of time, of the usual time of starting work, should an employee be required to give notice of the intention to take special leave? 16
6.7 What rate of pay should an employee be paid for a day taken as special leave? 16
6.8 Should an employer be able to require an employee, who takes or wishes to take special leave, to produce proof of the employee's entitlement to it and if so, in what circumstances? 16
6.9 Should an employee be able to accumulate any unused special leave for use in any subsequent leave period. 17
6.10 Should the entitlement to special leave be in addition to any other special leave type entitlements agreed to by an employer and employee? 17

7. GENERAL AND ENFORCEMENT 18
7.1 Should the Crown be bound by holidays legislation? 18
7.2 Should "homeworkers" (and any other groups that do not fall within the usual definition of "employee" but are deemed by legislation to be "employees") be covered by holidays legislation? 18
7.3 Where an employer dismisses an employee but re-employs the employee within one month (or some other period), should the employee's employment be deemed continuous in respect of one or more of the entitlements to public holidays, annual holidays and/or special leave? (See section 20 of the Act.) 18
7.4 Where employers wish to provide for more favourable entitlements than the prescribed minimum, should the entitlements be measured on a comparison of specific provisions or on a package basis? 19
7.5 Should holidays legislation set out examples to show how the provisions are to be applied to different situations in different workplaces? 19
7.6 Should an employer be under an obligation to supply information to its employees on their holiday and leave entitlements? 19
7.7 In what ways can the entitlements to holidays and leave be enforced? 20

APPENDIX 1 – JURY SERVICE 21
APPENDIX 2 – TERMS OF REFERENCE 23
1. INTRODUCTION

The Advisory Group on the Holidays Act first reported to the Minister of Labour in early May 2001. On 17 May 2000 the Minister requested the Advisory Group to reconvene and consider whether it was possible to find further compromises within the positions stated in its report. Subsequently, a sub-committee of the Advisory Group met on several occasions, made reasonable progress, and the Advisory Group is now in a position to provide a second report.

2. STRUCTURE OF THE REPORT

The structure of this report reflects the deliberations of the Advisory Group and is designed, where possible, to provide policy recommendations to the Minister of Labour. For ease of comparison, the structure follows that of the first report and the issues are numbered in the same way. For completeness, if there has been no change from the first report, the parties’ positions have been repeated in this second report.

3. JURY SERVICE

The Advisory Group has also been asked to consider Jury Service. The views of the Advisory Group are contained in Appendix 1 and follow the numbering of the terms of reference (contained in Appendix 2).
4. PUBLIC HOLIDAYS
4.1 Should an employee get a paid public holiday regardless of whether the public holiday falls on a day that would otherwise be a working day for the employee?

(a) Employer Position:
 Continue with the current position, but where it is arguable or unclear whether a day is an otherwise working day this should be ascertained by application of a formula. For example, in relation to a public holiday that falls on a Monday, by asking whether the employee has worked on 4 Mondays over the previous 6 weeks, or 8 over the previous 12 weeks.

(b) Union Position:
 Consideration of modifying the "otherwise working day" criteria has revealed that it does not adequately address the position of employees who are unfairly deprived of public holiday entitlements (e.g. Tuesday to Sunday full time employees miss out on all Monday public holidays). On the basis of the Labour Party election policy:

"The improved legislation will include:
clear rights for all full time workers to access 11 paid public holidays a year and all part time workers to access their appropriate portion of that"

 The Union proposes that officials undertake further work to develop a mechanism by which this policy can be implemented in a practical way. Employees who work 5 or more days per week, or who work full-time ( 30 or more hours per week) should be entitled to 11 paid public holidays, and part-time workers on a proportionate basis.

4.2 What mechanism should govern the days on which the 11 public holidays are observed?
(a) Policy Recommendation:
 Continue with the current position: Unless an employer and an employee agree otherwise, the public holidays to be observed by default are Christmas Day, Boxing Day, New Year's Day, 2 January (or some other day in its place); Good Friday; Easter Monday; ANZAC Day; Labour Day; the birthday of the reigning Sovereign; Waitangi Day; the day of the anniversary of the province (or some other day in its place) (section 7A(2)).

4.3 Should the observance of the Christmas and New Year public holidays be automatically transferred into the Monday to Friday working week when those days fall in the weekend (i.e. "Mondayised")?

(a) Employer Preferred Position:
 Continue with the current position – i.e. “Mondayised” unless otherwise agreed.

(b) Alternative Employer Position:

 Where work performed in the enterprise is normally confined to the Monday to Friday working week, Christmas and New Year public holidays should be automatically transferred when those days fall in the weekend. If work is normally performed in the enterprise on a Saturday and/or Sunday, Christmas and New Year public holidays should be observed where they fall.

(c) Union Position:
 Enact the proposal in the Holidays draft Bill prepared by the Department of Labour in 1998 under the previous Government : The Christmas and New Year public holidays are observed on the days they fall for employees who normally work on the weekend and transferred to the following Monday/Tuesday for employees who do not normally work on the weekend.

4.4 Should an employer and employee be able to agree to observe Waitangi Day and/or ANZAC Day on alternative days?

(a) Policy Recommendation:
 Waitangi Day and ANZAC Day be observed on the days they fall (i.e. not "Mondayised") but the employer and employee may agree to observe them on alternative days.

4.5 Where an employee works on Waitangi Day or ANZAC Day, should the employee's entitlement to a day in lieu be lost if the employer pays the employee more than ordinary rates of pay?

(a) Policy Recommendation (subject to Employer exception see below):
 Waitangi and ANZAC Days should be consistent with other public holidays. If an employee works on Waitangi Day or ANZAC Day the employee is entitled to a day in lieu if the day is an otherwise working day, irrespective of the pay he or she receives.

(b) Employer Exception:
 Subject to the rate of pay for working on a public holiday being rate and a half, unless negatived or varied by agreement (see 4.8 below).

4.6 What rate of pay should an employee be paid for a public holiday (where the employee does not work on that public holiday)?

(a) Policy Recommendation (subject to Employer exception see below):
 Codify Ports of Auckland based on the following principles:

– an employee must be paid what he/she would receive for an ordinary working day;

– the pay for an ordinary working day is a matter of construction of each particular employment agreement;

– there is no scope for bargaining for a lesser special rate solely for the purposes of calculating statutory holiday pay;

– anything which is clearly payable only in defined circumstances or at defined times is excluded, such as overtime, bonuses and allowances. Productivity and incentive based payments which are dependent on actual working results need not be notionally calculated and paid;

– allowances that are payable as of course should be distinguished from those payable only in particular circumstances, even if they occur regularly and even if they would have been payable if the employee had worked that day.

(b) Employer Exception:

 The third point (above) does not include situations where there is a negotiated ordinary rate of pay applicable to all non-working time when payment for work is based, for example, on piece rate, productivity incentive based payments, commission or bonus payments.

4.7 When should an employee be paid for a public holiday?
(a) Policy Recommendation:
 An employer must make a payment in respect of a public holiday in the pay that relates to the period in which the public holiday occurs.

4.8 What rate of pay should an employee be paid for working on a public holiday (in addition to a day in lieu)?

(a) Employer Position:
 The rate of pay for an employee who works on a public holiday should be rate and a half, unless negatived or varied by agreement (i.e. by default). The current position is that "factories and undertakings" defined in the Factories and Commercial Premises Act (since repealed) require double rate to be paid for time worked on public holidays with the ability to negative or vary that rate by agreement. This is a relatively common practice. Workplaces that are not factories or undertakings are not required to pay anything beyond ordinary rate.

(b) Union Position:
 The rate of pay for an employee who works on a public holiday should be rate and a half which is consistent with the Labour Party 1999 election policy:

"The improved legislation will include:
a minimum additional payment plus a day in lieu for those who work on a public holiday"

and Alliance 1999 Election Policy.

4.9 Should an employee who works on a public holiday, but who cannot show that it would otherwise be a working day, be entitled to a day in lieu?

See 4.1
4.10 If an employee works on any part of a public holiday should he or she be entitled to a day in lieu?

(a) Employer Position:
 Where an employee's work day falls within one calendar day (i.e. between midnight and midnight), and the employee works on any part of a public holiday, then the employee should be entitled to a day in lieu where the day is otherwise a working day for the employee.

 Where an employee's work day/shift straddles 2 calendar days, the employee shall be entitled to the provisions of this section only where the work performed on the public holiday falls within the definition of that employee's 'day' of work, as provided in his or her employment agreement. Where the employment agreement provides no definition of an employee's day of work, that day, for the purposes of this section, shall be the day on which the employee works the greater number of hours. Where an equal number of hours is worked by the employee on each calendar day, the day of work shall be the day on which work commences.

(b) Union Position:
 If an employee works on any part of a public holiday which is normally a working day for the employee he/she is entitled to a day in lieu. The entitlement to a day in lieu is regardless of whether there are rules designating the day that the shift belongs to, because that is not consistent with the Act which requires that if an employee works on any part of a public holiday he or she has not had a “whole holiday” and is entitled to a day in lieu. (codify Lyttelton Port Company).

4.11 Should an employee who is on-call on a public holiday but who is not called out be entitled to a day in lieu?

(a) Policy Recommendation:
 Codify Guardian Alarms based on the following principles:

– Being on call does not in itself entitle an employee to a day in lieu;

– An employee is entitled to a day in lieu where the day is an otherwise a working day and the nature of the restriction on the employee's freedom of action are such that, for all practical purposes, the employee has not had a whole holiday.

4.12 Who should determine when a day in lieu is taken?

(a) Employer Position:
 by agreement between an employer and an employee;

 failing agreement and within 12 months of the entitlement accruing, it should be the employee's choice, taking into account the employer's views as to its convenience and by giving 14 days notice;

 if the employee does not take a day in lieu within 12 months of the entitlement accruing, the employer may direct the employee to take the day in lieu by giving 14 days notice;

 if the employee does not take a day in lieu within 12 months of the entitlement accruing, the employee may request or the employer may offer to exchange the day in lieu for cash.

(b) Union Qualification:
 The same as the employer position except that:

– If the employee does not take a day in lieu within 12 months of the entitlement accruing and the employer directs the employee to take the day in lieu by giving 14 days notice the employee may nominate a day, such day to be within 21 days of receipt of the employer notice, for lieu day purposes and may choose to either take that nominated day as a lieu day or exchange the day in lieu for cash.

– There should be no requirement for the employee to give 14 days notice as this would be inconsistent with the principle that an employee determines the day on which the lieu day is observed and a practice has developed of taking such days for domestic crisis purposes e.g. bereavements.

– The agreed position, as qualified by the union position as set out above is subject to agreement on the union position in 4.8. Failing agreement the union position is to retain the status quo of unlimited accumulation and employee choice.

4.13 Should days in lieu accumulate if not taken within a specified period of time of them accruing?

(a) Policy Recommendation:
 The right to a day in lieu does not lapse if not taken (note that if the employee does not take a day in lieu within 12 months of the entitlement accruing, the employer may direct the employee to take the day in lieu on 14 days notice. See 4.12 above).

4.14 Should the time period that an employee takes off on a day in lieu reflect the actual time period worked on the public holiday?

(a) Policy Recommendation:
 Codify the current position: The time period that an employee takes off on a day in lieu does not reflect the actual time period worked on the public holiday. The employee is entitled to a whole day off regardless of the actual time period worked on the public holiday (e.g. if an employee works for one hour on a public holiday the employee is entitled to a whole day off on the day taken as the day in lieu, even if the employee would normally work 8 hours that day).

4.15 What rate of pay should an employee be paid for a day in lieu?

(a) Employer Position:
 Apply the principles in Ports of Auckland (see 4.6 above). Where it is unclear or arguable what an ordinary day is, the payment should be based on the average ordinary hours worked per day in the previous four pay periods.

(b) Union Position:

 Apply the principles in Ports of Auckland (see 4.6 above) to the lieu day nominated by the employee.

4.16 When should an employee be paid for a day in lieu?

(a) Policy Recommendation:
 An employer must make a payment in respect of a day in lieu in the pay that relates to the period in which the day in lieu is taken.

4.17 What provision should be made for days in lieu not taken upon termination of employment?

(a) Policy Recommendation:
 Where employment is terminated on notice by either party, the employer may reduce the requirement for the employee to be present at work by the number of lieu days accrued by the employee.

 Where employment is terminated and the employer makes a payment in lieu of notice, the employer may not take the approach in (a) above and must make a payment in relation to those lieu days.

4.18 Should all employees, regardless of where they are employed, be covered by the same rules, or should the provisions dealing separately with employees employed in a "factory" or "undertaking" remain as they presently stand?

Separate provisions for employees employed in a “factory” or “undertaking”
(a) Policy Recommendation:

 The factories and undertakings distinction should be removed but subject to the parties respective positions as set out in 4.8.

Proportionate payment for a public holiday
(a) Policy Recommendation:
 The proportionate payment provisions should be removed. (This is subject to codification of the rule that on termination of employment, an employee should be paid for a public holiday that occurs in the period commencing on the date of termination and extending for the period of accrued annual leave (see 5.16 below).

Default penal rates for public holidays

(a) Employer Position:
 The rate of pay for an employee who works on a public holiday should be rate and a half, unless negatived or varied by agreement (i.e. by default). (See 4.8.)

(b) Union Position:

 The rate of pay for an employee who works on a public holiday should be rate and a half. (See 4.8.)

Default penal rates for Sundays

(a) Employer Position:
 The provisions for providing for default penal rates for working on a Sunday should be removed. Sunday is not a holiday and has no place in holidays legislation.

(b) Union Position:

 The rate of pay for working on a Sunday should be rate and a half unless negatived or varied by agreement (i.e. by default).

Special provisions:
 For night workers in a newspaper factory (s 28)
(a) Employer Position:

 For industry to specifically decide and submit on.

(b) Union Position:

 Remove the provisions.

 For dairy workers (s 9(4))
(a) Employer position:

 For industry to specifically decide and submit on.

(b) Union position:

 Continue with current position.

5. ANNUAL HOLIDAYS
5.1 Should there be any change to the current entitlement of 3 weeks annual holidays?

(a) Employer Position:

 Retain the current position.

(b) Union Position:

 The minimum annual leave entitlement should be increased to four weeks in accordance with the 1999 election policies of the Labour Party and the Alliance.

5.2 Should the entitlement to annual holidays be based on "weeks" or should some other basis be used?

(a) Policy Recommendation:

 Continue with the current position: The entitlement to annual holidays is based on "weeks" (subject to Employer qualification see below).

(b) Employer Qualification:

 The legislation should, for operational purposes, clarify that an employment agreement may specify entitlement to annual holidays in days or weeks (but must not effect a reduction in entitlement of any employee). This could be achieved in the definition of "week".

5.3 Should there be a qualifying period before an employee becomes entitled to annual holidays and if so, what period?

(a) Policy Recommendation:

 Continue with the current position: An employee becomes entitled to annual holidays after 12 months employment.

5.4 Should provision be made to ensure that an employee is able to take a portion of his or her entitlement to annual holidays in one block?

(a) Policy Recommendation:

 Continue with the current position: An employer shall allow an employee at least 2 uninterrupted weeks of annual holidays, commencing within 6 months of becoming entitled, and shall allow any balance to the employee within 12 months.

5.5 Should an employee be required to take annual holidays within a specified time of them accruing and if so, should the employee forfeit those annual holidays not taken?

(a) Policy Recommendation:

 The entitlement to annual holidays remains in force until it is taken (note this is subject to the right of the employer to direct see 5.6 below).

5.6 What period of notice should be given when an employer requires an employee to take annual holidays at a particular time?

(a) Employer Position:

 In the absence of agreement, the employer must give the employee 14 days notice of the date upon which the employee is required to take annual holidays.

(b) Union Position:

 In the absence of agreement, the employer must give the employee at least 14, and where possible 21 days notice of the date upon which the employee is required to take annual holidays.

5.7 Should restrictions be placed on an employer's ability to cancel an employee's annual holidays?

(a) Policy Recommendation:

 Continue with the current position:

– No express provision restricting an employer's ability to cancel an employee's scheduled annual holidays.

– If annual holidays are cancelled an employee may bring an action against his or her employer for breach of the duty to act in a fair manner: Vining v Air NZ (unreported, Colgan J, 26 May 1995, AEC 41/95) or to act in good faith under the Employment Relations Act 2000.

5.8 How should periods of authorised unpaid leave (including parental leave, personal leave, ACC and sick leave) affect the entitlement to annual holidays?

Parental Leave

(a) Employer Position:

 Entitlement to annual holidays should not accrue while an employee is on parental leave.

(b) Union Position:

 Entitlement to annual holidays while an employee is on parental leave should be addressed in the context of the Paid Parental Leave policy development process.

Unpaid leave for personal reasons
(a) Employer Position:
 Entitlement to annual holidays should not accrue while an employee is on unpaid leave for personal reasons for more than one week.

(b) Union Position:

 Subject to other applicable legislation the employer and employee may agree that entitlement to annual holidays should not accrue while an employee is on unpaid leave for personal reasons for more than one week.

ACC
(a) Employer position:
 An employee should not accrue annual holidays when he or she is on ACC or unpaid sick leave for more than one week.
– An employee is not providing any services so should not accrue annual holidays.

– An employer may be more inclined to terminate an employee’s employment when that person is on long term ACC to avoid an annual holiday liability, rather than work with the employee towards his or her rehabilitation and return to work.

(b) Union position:
 Continue with the current position.
– ACC is a no fault system so the employee should not be further penalised.

5.9 How should annual holiday pay be calculated in various circumstances?

(a) Policy Recommendation (subject to Employer Qualification):

 Further work should be undertaken by officials, with the primary objective being to simplify the current position without diminishing current entitlements.

(b) Employer Qualification:

 Where holidays are taken in advance there should not be a requirement to recalculate holiday pay at the date when the holiday actually becomes due – for example where the employee has received an increase in remuneration during the period.

5.10 Should annual holiday pay be allowed to be paid to an employee periodically in advance rather than at the time of taking the annual holiday and if so, in what circumstances?

(a) Employer Position:

 Codify Gladstone (annual holiday pay due on termination may be paid periodically in advice) and Drake (periodic pay allowable for employees of less than 12 months).

 Employer clause

Where any person is employed by an employer either as a casual, temporary, or fixed term employee or as a piece worker, that employee may agree with the employer in writing, or as part of the applicable collective employment agreement, that the employer:

(a) Pay 6% of the gross pay to such an employee at the termination of the employee's employment, in which case the payment of holiday pay shall be satisfied and provision of any annual holiday shall not be required; or

(b) Add a separately identified amount equal to 6% of gross earnings to the employee's total hourly or weekly pay in satisfaction for any requirement to provide either payment of holiday pay or an annual holiday;

(c) Where an employee does not agree in writing under paragraph (b) above, the provisions of paragraph (a) shall apply;

(d) Should an employee who has agreed with the employer pursuant to paragraph (b) above obtain regular employment with the same employer either on a part-time or on a full-time basis, the entitlement to pay for leave under the general provisions of this Act [i.e. three weeks after twelve months] shall be offset by the amounts paid pursuant to paragraphs (a) or (b) above.

DEFINITION OF CASUAL EMPLOYEE

Casual Employee for the purpose of this Act is a person employed to work on an as and when required basis with no guaranteed hours or guaranteed pattern of work.

FIXED TERM EMPLOYEE

Fixed-term Employee for the purposes of this Act is an employee who is employed for a specified period of time or for the completion of a particular task.

PIECEWORKER

Pieceworker for the purposes of this Act is a person employed and paid for work on a per piece basis.

Note: This draft clause is included as indicative drafting only

(b) Union Position:

 Payment of holiday in advance should be limited to casual employees as per the following draft clause:

Holiday pay normally not to be included in ordinary pay
An employer must pay annual holiday pay only when annual holidays are being taken or when the employment of the employee comes to an end.

When holiday pay may be included in normal pay
1. Despite section xx, an employer may pay annual holiday pay before holidays are taken, but only if-

(a) The employee is a casual employee; and

(b) The employee agrees in writing; and

(c) The annual holiday pay is paid as an identifiable addition to the employee's ordinary pay; and

(d) The annual holiday pay is paid at a rate of not less than 8 per cent 1 of the employee's gross hourly or weekly earnings..

2. For the purposes of this section a "casual employee" is an employee who is employed to work on an irregular basis, with no fixed pattern of work and where any one engagement is not longer than one week.. For the avoidance of doubt nothing in this definition affects the meaning of the words “casual employee” in any other employment context.

3. The agreement of an employee under subsection 1(b) must be entered, at the time of the agreement, by the employer in the leave record.

4. Annual holiday pay paid under subsection 1 must be recorded by the employer-

(a) In the annual leave record; and

(b) Clearly and separately identified In any pay advice or pay slip which is provided to the employee and which related to the pay that includes the annual holiday pay.

5. If any of subsections 1 to 3 above have not been complied with, money paid as annual holiday pay before annual holidays are taken must be treated as part of the employee's gross earning and annual holiday pay remains payable to the employee.

6. The employee may withdraw agreement at any time by giving 14 day's notice to the employer.

1 The use of 8 per cent is based on the expectation that annual holidays entitlement will be increased to 4 weeks.

Note: This draft clause is included as indicative drafting only

5.11 Should the provisions that contemplate an employer's ability to closedown its business be continued and if so, should they be changed?

(a) Policy Recommendation:

 Continue with the current position (s18 of the Holidays Act).

5.12 Should an employer be able to require an employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement to take the period off work as annual holidays?

Agreed that this is not an issue in itself and that it is captured by 5.13 below.

5.13 Should an employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement be able to request, and his or her employer be able to allow the employee, to take the period off work as annual holidays?

(a) Policy Recommendation:

 An employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement should be able to request, and his or her employer should be able to allow the employee, to take the period off work as annual holidays.

5.14 Should an employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement while on annual holidays be able to take that period as special leave?

(a) Policy Recommendation:

 An employee who is sick or injured, or whose dependant is sick or injured, or who suffers a bereavement while on annual holidays is not able to take that period as special leave, unless otherwise agreed.

5.15 Where an employment relationship is terminated and annual holidays are owing, should the employment relationship cease at the date of termination, or should it be deemed to continue until the annual holidays expire?

(a) Policy Recommendation:

 Codify the current position: The employment relationship ceases at the date of termination and is not extended to the end of the unused annual holiday entitlement: Parker v Auckland Regional Council [1993] 1 ERNZ 152 (EC).

5.16 On termination of employment, should an employee be paid for a public holiday which falls during the period of any unused annual holidays added to the date of termination?

(a) Policy Recommendation:

 Codify the current position: If a public holiday falls within the period of unused annual holidays added to the date of termination then the employee is entitled to be paid for the public holiday: Northern Hotel etc IUOW v Dominion Breweries Ltd [1988] NZILR 810 (LC).

6. SPECIAL LEAVE

6.1 Should there be any increase to the current entitlement of 5 days special leave?

(a) Employer Position:

 The entitlement to special leave should be expressed as "one week" to enable the leave to be pro rated for less than full-time employees.

(b) Union Position:

 An employee should be entitled to 5 days sick/domestic leave (with no pro rating) and a two-tiered bereavement leave entitlement (see 6.5 below).

6.2 Should the entitlement to special leave be split up into types of leave such as sick leave, domestic leave and/or bereavement leave (or Tangihanga leave) with separate entitlements for each?

(a) Employer Position:

 Continue with the current position but the entitlement should be expressed as "one week" (see 6.1(a) above).

(b) Union Position:

 Special leave should be split into sick/domestic leave and bereavement leave as per Labour Party and Alliance 1999 Election policy.

6.3 Should the entitlement to special leave be expressed in "days" or "week(s)"?

(a) Employer Position:

 The entitlement should be expressed as one "week" rather than 5 "days" and apportioned on the basis of the number of days worked each week.

(b) Union Position:

 Continue with the current position.

6.4 Should there be a qualifying period before an employee is entitled to special leave and if so, what period?

(a) Policy Recommendation:

 Continue with the current position.

6.5 On what grounds should an employee be entitled to take special leave?

(a) Employer Position:

Employer Clause:

Special leave under this section may be taken only when:

(a) The employee is sick; or

(b) The spouse of the employee is sick; or

(c) A dependent child or dependent parent of the employee or of the spouse of the employee is sick; or

(d) The employee suffers bereavement.

For the purposes of this section "dependent" in relation to a child of the employee or the employee's spouse means a child under the age of 16 years and in relation to a parent means a parent who is reliant on the employee for care.

(b) Union Position:

 Sick/Domestic Leave

– Enact the proposal in the 1998 Holidays draft Bill in relation to sick and domestic leave but add that an employee should also be able to take sick/domestic leave when a person becomes dependent on the employee because they are sick or injured.

 Bereavement leave

– 3 days bereavement leave on the death of an employee’s parent, child, sibling, partner, grandparent, grandchild, and parent of partner.

– Retain current discretion for employer to grant one days bereavement leave on any other occasion where the employer accepts the employee has suffered a bereavement, and add a requirement to take into account cultural requirements.

– Re-title as “Tangihanga - Bereavement Leave”.

6.6 Within what period of time, of the usual time of starting work, should an employee be required to give notice of the intention to take special leave?

(a) Policy Recommendation:

 The employee must notify the employer before his or her scheduled start time or as soon as practicable thereafter.

6.7 What rate of pay should an employee be paid for a day taken as special leave?

(a) Policy recommendation:

 Payment for special leave should be the same as for public holidays (see 4.6 above).

6.8 Should an employer be able to require an employee, who takes or wishes to take special leave, to produce proof of the employee's entitlement to it and if so, in what circumstances?

(a) Employer Position:

 An employment agreement should be able to set out the requirements for an employee to provide proof of the employee's entitlement to special leave.

(b) Union Position:

 Continue with the current position.

6.9 Should an employee be able to accumulate any unused special leave for use in any subsequent leave period.

(a) Employer Position:

 Continue with the current position.

(b) Union Position:

 An employee should be able to accumulate any unused sick/domestic leave.

6.10 Should the entitlement to special leave be in addition to any other special leave type entitlements agreed to by an employer and employee?

(a) Policy Recommendation:

 The entitlement to special leave should not by default be in addition to any other special leave type entitlements agreed to by an employer and employee.

7. GENERAL AND ENFORCEMENT

7.1 Should the Crown be bound by holidays legislation?

(a) Policy Recommendation:

 The trend in recent years has been to align the State sector and the private sector under common employment legislation. Therefore the Crown should be bound by holidays legislation, provided that:

– there are clear grounds for some specific exemptions (e.g. sworn members of the Police and the Armed Forces).

– the extension of the legislation to the Crown should not of itself affect existing entitlements in the State sector.

– there may need to be a transition period to enable State sector employers to comply with any new legislation (e.g. 12 months).

7.2 Should "homeworkers" (and any other groups that do not fall within the usual definition of "employee" but are deemed by legislation to be "employees") be covered by holidays legislation?

(a) Employer Position:

 Holidays legislation should specifically exclude any individuals who are “deemed” to be employees through the operation of the definition of “homeworker” in the Employment Relations Act 2000.

(b) Union Position:

 Continue with the current position: Homeworkers are deemed to be employees for purposes of holidays legislation.

7.3 Where an employer dismisses an employee but re-employs the employee within one month (or some other period), should the employee's employment be deemed continuous in respect of one or more of the entitlements to public holidays, annual holidays and/or special leave? (See section 20 of the Act.)

(a) Policy Recommendation:

 Clarify that if employment is terminated, and the employee is re-employed within one month, employment is not to be deemed continuous for the purposes of annual holidays, but may be for other service related benefits. The intention is to avoid double dipping where a genuine fixed-term employee becomes permanently employed.

 Where an employee is dismissed and re-employed, employment should be deemed continuous if the purpose of the dismissal was to evade statutory obligation. In the case of a dismissal and re-employment the employment shall for the purposes of section 11 of this Act and for calculating holiday pay be deemed to have continued as if the dismissal had not occurred, unless a Labour Inspector certifies in writing that he/she is satisfied that in terminating the employment the employer acted in good faith and not for the purpose of evading or attempting to evade any obligation imposed by this Act or any payment required to be made under it.

7.4 Where employers wish to provide for more favourable entitlements than the prescribed minimum, should the entitlements be measured on a comparison of specific provisions or on a package basis?

(a) Employer Position:

 The entitlements offered by an employer should be measured against each of the statutory entitlements (public holidays, annual holidays and special leave) on a package basis.

(b) Union Position:

 Enact the proposal in the 1998 Holidays draft Bill:

– An employment agreement has no effect to the extent that it excludes or restricts a statutory entitlement.

7.5 Should holidays legislation set out examples to show how the provisions are to be applied to different situations in different workplaces?

(a) Policy Recommendation:

 Educative material and booklets produced by the Department of Labour should include examples and draft clauses – if developed in consultation with Business NZ and NZCTU.

7.6 Should an employer be under an obligation to supply information to its employees on their holiday and leave entitlements?

(a) Employer position:
 Employers should not be under any statutory obligation to supply general information on Holidays Act entitlements as to do so is a significant compliance issue for small employers. However, employers do recognise the practical need to provide information to individuals on their actual entitlement.
(b) Union position:
 An employer should have to provide information to its employees on their holiday and leave entitlements.
– this is particularly important to young employees who are most vulnerable as they often do not know what their entitlements are.

– may reduce compliance costs.

– basic information could be produced by the Department of Labour for use by employers and may be contained on the Department of Labour’s website.

 Standard clauses setting out an employee’s entitlements may be included as an appendix to the legislation. They could be produced in a form that allowed the clauses to be inserted directly into employment agreements.
– may reduce compliance costs.

– the main provisions of the legislation could be reproduced as standard clauses.

– the standard clauses may be contained on the Department of Labour’s website for downloading by employers, employees and their representatives.

– this issue may be looked at by the Employment Rights Unit (if established) to help reduce compliance costs.

7.7 In what ways can the entitlements to holidays and leave be enforced?

(a) Policy Recommendation:

 Employers and employees and their representatives can take recovery or compliance action to ensure that entitlements and obligations are met.

 Statutory officers can take penalty actions and this should include a system of administrative penalties (instant fines) for breaches, subject to normal rights of appeal and review.

 Specific reference to a separate holidays book may not be appropriate provided that clear and accessible records are maintained.

APPENDIX ONE
JURY SERVICE
This section follows the questions set out for consideration in the terms of reference.

1. Should there be a right to leave for jury service and, if so, for how long?
(a) Recommendation:
 Employees should have a right to leave for jury service, for the length of the trial or period that they are required to serve, subject to extenuating circumstances affecting either the employee or the employer.

 The Advisory Group agrees with the Law Commission's recommendation that it should be an offence for an employer to dismiss or otherwise disadvantage an employee for reason of the employee's absence because of jury service.

2. How should any provisions regarding jury service leave relate to the Juries Act 1981 and Jury Rules 1990?
(a) Recommendation:
 All provisions regarding jury service leave, including payment, should be contained in the Juries Act, and not in employment legislation such as the Holidays or Employment Relations Act.

3. Should jury service leave be paid and if so, how (i.e. employer paid or tax funded), and at what rate (i.e. replacement wages or fees)?
(a) Agreed general position:
 Jurors should receive some payment for jury service.

(b) Employer Position:
 Paid jury service leave should not be a legislative requirement. Jury service is a community benefit and should be tax funded as per the Law Commission recommendation:

Jurors should continue to be paid at a flat rate as set out in the Jury Rules 1990, but where a juror can demonstrate actual financial loss in excess of that flat rate, the registrar should have the discretion to increase the payment to cover or contribute to the juror's actual loss.

 Amendment to the Jury Rules 1990 will be required.

(c) Union Position:
 Employees should not suffer any financial loss by performing jury service.

 The employer should pay wages/salary to an employee on jury service, the Department for Courts reimbursing the employer.

 There would be an additional provision for payment of fees to non-employee jurors.

(d) Alternative Union Position:
 There should be a tax funded payment for jury service that ensures vulnerable employees do not suffer financial loss. Payment could be capped at a certain level or at the discretion of the Registrar, so long as this is targeted to achieve protection of lower waged employees. Payment must also be timely, i.e. in the week of jury service. The Law Commission recommendation may be acceptable if the level of fees reflects this.

4. The relationship between paid leave and the current provisions for jury service fees
 See 3. above.

5. That employer-paid leave does not assist those that are excused because they are self-employed or contract workers
 If payment for jury service is tax funded this would apply equally to employees and non-employees.

6. The recommendations of the Law Commission
 In addition to the above, the Advisory Group agreed with the recommendation of the Law Commission that jurors should be allowed to defer their service.

APPENDIX TWO

TERMS OF REFERENCE

Purpose of the Advisory Group

The Advisory Group will advise the Government on the current situation and possible future policy options for amending the Holidays Act to:
 ensure that the Act is both robust and appropriate to accommodate increased diversity in working patterns;
 review entitlements to balance the needs of employers and employees with a view to increasing productivity; and
 note the manifesto statements and any subsequent policy statements by the Government Coalition Partners in relation to the Holidays Act.

The Group will conduct its work in two phases:
 information identification and gathering;
 assessment of policy options.

Information identification and gathering

The Advisory Group will identify what information it requires to carry out its functions. Without limiting the Advisory Group, the Government will ask that consideration be given to:
 the existing arrangements in employment agreements for annual leave, statutory holidays, leave for bereavement or for the sickness of the employees or their dependants, and any other options for leave;
 international practice and international standards and conventions in relation to annual leave, statutory holidays and leave for bereavement or for the sickness of the employees or their dependants;
 the needs of employers in relation to the provision of leave for their employees;
 the needs of specific groups of employees for particular types of leave under the Act; and
 the problems that occur in relation to the present application of the Holidays Act.

Assessment of policy options
Following the information-gathering phase, the Advisory Group will be asked to consider and make recommendations on ways to ensure that:
 entitlements under holidays legislation are appropriate in contemporary society and labour markets;
 the entitlements balance the needs of employers and employees; and
 the entitlements reflect and promote increased productivity.

In assessing possible future interventions, the Group will be expected to give consideration to:
 the Government’s wider objectives for the labour market and for a growing and dynamic economy;
 the costs and benefits of alternative policy interventions; and
 any likely implications of those interventions, including effects on employment or income distribution.

The Group is expected to note the attached Schedule of particular issues to be considered.

Reporting
The Chair will be responsible for ensuring that the Minister of Labour is kept informed of the progress of the Advisory Group.

Within a month of being appointed, the Advisory Group will meet to:
 confirm their terms of reference;
 design a work programme, including proposals for a research programme;
 have terms of reference and work programme approved by Minister of Labour; and
 establish a programme of monthly reports to Minister on progress.

The final report of the Advisory Group shall contain policy recommendations to the Minister.

SCHEDULE OF PARTICULAR ISSUES TO BE CONSIDERED

Particular issues to be considered by the Advisory Group are briefly outlined below.

Annual Holidays
The primary issue in relation to annual holidays is whether the entitlement is increased from 3 to 4 weeks. This is policy decision and need not be considered by the Advisory Group.

Another major issue in relation to annual holidays is the ability to “pay as you go” annual holiday pay. Currently, this is permissible for employees of less than 12 months. The 12-month limit is in accordance with the objective of annual holidays as providing for rest and recreation (an employee does not become entitled to paid annual holidays until the completion of 12 months service).

An option that may be considered by the Group is whether to allow "pay as you go" annual holiday pay for fixed-term agreements of 12 months of less.

Public Holidays
The primary issues in relation to public holidays are:
1. The entitlement to paid public holidays; and
2. Payment for working on a public holiday.

These turn on the objective of public holidays. The overall objective is the common observance of days of significance. Beyond this, there appears to be a divergence in belief that is reflected in the alternative ways that paid public holidays may be provided. One view is that employees should not be financially disadvantaged by the observance of a public holiday. Another is that employees should be paid to observe a public holiday.

The current position provides for paid public holidays where they fall on days that would otherwise be working days for the employee. Removing this proviso introduces proportionality issues.

The Group may consider whether and how these proportionality issues can be taken into account.

The issue of payment for working on a public holiday is linked to the current default provision in the Holidays Act for employees in factories and undertakings.

Employees in factories and undertakings are currently paid a proportionate payment for a public holiday (the “one tenths rule”), and by default double time for working on a public holiday. For all other employees, this issue is currently one that is for agreement between an employer and employee(s).

Removal of the provisions for factories and undertakings altogether may result in a reduced entitlement for employees who are currently paid in accordance with those provisions. It is not known what proportion of the workforce are employed in “factories and undertakings”, nor the proportion to who the provision applies that contract out of the provision.

Special Leave
The primary issues in relation to special leave are:
1. The level of entitlement (including whether it is expressed as “days” or “weeks”); and
2. Whether special leave should be split into two entitlements to (a) sick and domestic leave and (b) bereavement leave.

These two issues are interrelated; if the entitlement was split without an increase to the current entitlement, it may in effect reduce the current entitlement to one or the other.

The expression of the level of entitlement as “days” or “weeks” is an issue for reasons of proportionality. Although expression as “weeks” addresses this to some extent, problems would still arise where an employee works an irregular number of days per week.

An issue that should be considered by the group is how proportionality issues may be taken into account.

Two other significant issues in relation to special leave should also be considered:
(a) accumulation of special (or sick/domestic) leave; and
(b) the grounds on which an employee is entitled to take special leave.

JURY SERVICE LEAVE
The following issues should be considered in relation to Jury Service Leave:
 whether there should be a right to leave for jury service and, if so, for how long;
 how any provisions regarding jury service leave would relate to the Juries Act 1981 and Jury Rules 1990;
 whether jury service leave should be paid and if so, how (i.e. employer paid or tax funded), and at what rate (i.e. replacement wages or fees);
 the relationship between paid leave and the current provisions for jury service fees;
 that employer-paid leave does not assist those that are excused because they are self-employed or contract workers; and
 the recommendations of the Law Commission.

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