Failure to define term could create loopholes in Holiday legislation

A proposed change to the Holidays Act which would allow employees to agree with their employers to be paid cash for a portion of their annual leave could cause some misunderstandings and leave agreements open to challenge.

This has been pointed out by the New Zealand Law Society in a submission to Parliament’s Transport and Industrial Relations select committee on the Holidays Amendment Bill.

A draft clause in the Bill provides for an employee to make an informed and voluntary request in writing for a maximum of one week’s annual leave entitlement to be paid out in cash.

Law Society spokesperson Jo Appleyard has told the select committee that because the phrase “informed and voluntary” is not defined, it raises the question of who informs the employee and when, and how that information is to be conveyed.

“If an employee successfully argues that the request was involuntary or they have unwittingly had a week’s annual leave paid out, the employee would be entitled to recover that week’s annual leave,” Ms Appleyard said.

“The word ‘informed’ leaves employers vulnerable to having to demonstrate that the employee was informed at the time of the request or at the time of the payment, and open to arguments about the level of information provided.”

Ms Appleyard said the first course of action for employees who contested that they were not “informed” would be for a Labour Inspector to recover that week’s paid annual leave.

She said it was the experience of Law Society members that the Labour Inspectorate was already working to capacity and a significant level of claims would cause difficulties and raise access to justice issues.

“Given that the effect of other proposed changes to employment law is to provide a statutory process to ensure procedural fairness, the current wording appears to be inconsistent with other proposed amendments,” Ms Appleyard said.

The Law Society suggested that the Bill should be changed to include a simple procedure that an employer could choose to follow to show that an employee was informed. However, that would not rule out the employee being informed in other ways too.

“At the very least the requirement for employee requests to be ‘informed’ should be defined, but not so as to place onerous procedural obligations on employers,” the Society submission states.

The Law Society also advised the select committee that another part of the Bill which allows for agreement to transfer public holidays uses “informed and voluntary” without any definition and this too could cause problems.

Ms Appleyard said the Society suggested a similar remedy to that for the provision on exchanging a portion of annual leave entitlement for cash.

ENDS

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