Wilkinson Kate: Holidays Amendment Bill — First Reading 
Wilkinson Kate: Holidays Amendment Bill — First Reading 
[Volume:665;Page:13331] 
Hon KATE WILKINSON (Minister of Labour) 
: 
 I move  
That the Holidays Amendment Bill be now read a first time. 
 At the appropriate time I intend to move that the Holidays Amendment Bill be considered by the Transport and Industrial Relations Committee that the committee report finally to the House on or before 5 November 2010 and that the committee have authority to meet at any time while the House is sitting except during questions for oral answer during any evening on a day in which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House and to meet outside the Wellington region during a sitting of the House despite Standing Orders 187 189(a) and 190(1)(b) and (c). 
The Holidays Amendment Bill will improve the overall operation and efficiency of the Holidays Act improve the balance of fairness and provide greater choice to employees and employers. The changes introduced to the House today will make it easier for employers and employees to understand and to comply with the holidays legislation. This bill follows a review of the Holidays Act by a ministerial advisory group of employer and union representatives that we set up last year. The Holidays Act affects all employers and employees. It is significant legislation. However parts of the Holidays Act have been criticised as being unclear overly complex and lacking choice for both employers and employees. A lack of clarity in holiday provisions has a negative impact on employment relationships and productivity because employers and employees have to spend time and resources trying to establish their rights and obligations. A high number of public submissions on the review shows that there are a number of issues that are important to people. The group’s recommendations provided me with a sound basis for arriving at the proposed changes we are debating today and I thank it for its work. 
We will be making a number of changes to the Holidays Act. The major changes propose to address the application and calculation of payment for public holidays alternative holidays sickness leave and bereavement leave and give employees the ability to exchange up to 1 week’s annual holiday a year for cash. Giving employees the ability to exchange 1 week’s annual holiday for cash was a National Party pre-election manifesto commitment and I am delighted to be implementing this policy. 
There is widespread public support for this exchange. New Zealanders want to be given greater choice and flexibility with their holidays and this Government is delivering it. This is an incredibly popular policy. All the feedback we have received from the public is in support of this choice. In fact the only concern raised to date is that this policy has not been available sooner. This exchange is all about choice. We are saying to New Zealanders that they are best placed to make their own decisions based on their own circumstances. After 9 years of a meddling Labour Government this comes as a welcome relief. New Zealanders can be trusted to make these decisions. If they want to take their full 4 weeks’ holiday a year then they can. If they feel they need only 3 weeks then they can ask their employer to trade it in and be paid that extra week as cash. If it works for both parties then it is a win-win. The necessary protections will be built into the law. The exchange cannot be raised in salary negotiations or as part of an employment contract. This is a sound policy and I expect that it will prove beneficial for many New Zealanders. 
The issue of relevant daily pay has proved to be the most difficult and frustrating part of the Holidays Act. The bill will address this issue. We acknowledge that for some employers and employees the existing arrangement of relevant daily pay is straightforward. For these people—for instance those on salaries—relevant daily pay remains the basis for calculating the pay for leave taken. Where relevant daily pay creates difficulties such as where pay or hours vary we will be introducing a new concept of average daily pay. Average daily pay is a daily average of an employee’s pay over a year or whatever lesser period the employee has worked for that employer. 
This change will make the Holidays Act easier to understand because the payment for leave is based on past identifiable earnings. The change addresses the issue of potential fluctuations in pay. Average daily pay avoids the higher and lower payments that can be caused by averaging over 4 weeks as is the case currently. It will be beneficial for employees and employers by providing more certainty around the value of leave for any particular day. It will provide more certainty where an employee is paid by piece rates; it will provide more certainty where an employee’s hours of work are dependent on the volume of work available; and it will provide more certainty where an employee receives different pay rates for different tasks. 
This bill also provides more choice for employers and employees by restoring the right to transfer the observance of public holidays to another working day. The 11 public holidays provided by the legislation are important to New Zealanders. However our society is changing. This law change recognises that it may better suit some workplaces and employees to agree to observe public holidays on other days. For example an employee may agree with his or her employer to observe Boxing Day on another working day that holds religious or cultural significance for that employee. The bill sets out a number of criteria that apply to any agreement to transfer public holidays. 
A minor change is being proposed to allow employers to request proof of sickness or injury within 3 consecutive days of an employee taking sick leave without first having reasonable grounds to suspect that the sick leave is not genuine. Despite the usual scaremongering from the Opposition claiming that the health system will be clogged up I do not expect that this law will be used very often at all. Employers have to pay for the proof and it is clear that they will request a medical certificate only when they genuinely suspect somebody of routinely pulling sickies. The current law is open to interpretation and employers have noted that they simply do not know at what point they have reasonable grounds. This change will make the law clear and simple. 
A late amendment to the bill will clarify employees’ entitlements during customary close-down periods such as at Christmas. This change makes it clear that employees are entitled to be paid for public holidays alternative holidays sick leave and bereavement leave falling during a customary close-down period if they would otherwise be working days for the employee. This does not change current practice but it ensures that the legislation reflects the original policy intent. This change is in response to a recent Employment Court decision. 
Lastly we will be seeking to increase the maximum penalties under the Holidays Act. The maximum penalties for non-compliance with the Act will double to $10000 for individuals and to $20000 for companies and other bodies corporate. There is no reason why employers cannot meet their obligations under this Act and the current penalties are too weak. Breaches of minimum entitlements are not conducive to good commercial practices and it is important that the law is taken seriously. 
This bill responds to concerns raised by the public about the Holidays Act. The bill retains the integrity of the Holidays Act and maintains employees’ holiday and leave entitlements. The bill clarifies areas of uncertainty and addresses concerns about how certain aspects of the Holidays Act are causing unnecessary costs and confusion. It gives greater choice to employees who may want more flexibility around how they take their annual holidays and public holidays. I commend this bill to the House.