New Zealand established the holidays’ act 2003 to define employee leave benefits and promote a healthier work-life balance. However, many businesses have been bewildered by its complexity since its inception, and the result has been punishing.
The New Zealand police were required to pay almost US$33 million to underpaid employees after a labor inspector audit in 2016. Due to irregularities in leave and shift allowance payments compiled since 2010, the district health boards announced in 2019 that they owed a whopping US$550-US$650 million.
Is the Act’s newest victim? More than 1000 Heinz-Wattie employees have filed a claim for compensation for improper holiday leave pay dating back to 2011.
A Holidays Act Taskforce was formed; as a result to iron out the kinks and provide greater clarity to companies and employees. Now, what should you know that the government has approved all 22 proposals? And, what does it mean for your business? There have been a few notable alterations.
Updates:
Changes in PAYG model
The majority of the misunderstanding surrounding the Holidays Act stems from the concept of irregular labor and how it affects employee eligibility for yearly holiday pay.
The term “intermittent or irregular” will be defined more thoroughly in the updated rules. Employees on a 12-month fixed-term contract will not be entitled to receive PAYG. PAYG employees’ eligibility for PAYG will be assessed every 13 weeks.
FBAPS eligibility Changes
The FBAPS eligibility for family violence, bereavement, alternate days, public holidays, and days of sick leave is projected to change.
Instead of needing to work for six months in succession, employees will soon be eligible for FBAPS days from the first day of work. As part of their eligibility, professionals will be eligible for three additional days of bereavement leave to cover other family members, allowing for more “modern family arrangements.”
Reduced discrimination against parental leave
The way new parents compute their annual leave after returning from parental leave will change. This is now calculated using the average weekly wage for the first 12 months following their return to work. Annual leave will be computed using the “greater of” technique to make it more equitable.
Advanced annual holiday leave
Employees are currently only entitled to four weeks of vacation after 12 months of continuous employment. According to proposed changes, they will be permitted to take yearly vacations within the first 12 months of employment, up to the amount they would be eligible for on a pro-rata basis.
What do you need to know to stay compliant?
The government of New Zealand intends to pass legislation by 2022, giving businesses that employ, operate, or are based in the country plenty of time to comply with and implement the new standards. How well prepared are you, though?
Employers must first ensure that these additional responsibilities are appropriately reflected in employee agreements, policies, and payroll systems.
Payslips will be needed for each pay period to ensure that leave benefits are transparent and clear. They must also explain how they determined the amount of time they have used and how much time they have left.
The demand for accurate bookkeeping has increased, and relying on paper-based systems is no longer sufficient. These antiquated methods make data collection difficult, and security is not assured, as paper records are more likely to be misplaced.
Companies must start using cloud-based platforms and embracing technology. Payroll administrators in New Zealand organizations and employers who want to maintain payroll processes in-house must at the very least complete payroll training courses.
Bottom Line
Using an effective cloud-based platform like Dynamics 365, on the other hand, can simplify data and eliminate the need for manual time and pay rate computations. Employee data is kept up to date with timesheets and rostering integrated directly into payroll, ensuring that leaves and entitlements are computed appropriately. A cloud-based solution, such as Dynamics 365, will be able to calculate and apply annual holidays and leave in advance, as well as indicate leave balances on payslips.
If you are unaware of the changes in New Zealand legislation and want to stay updated by implementing Dynamics 365, this is the time to get in touch with the DHRP experts to get started.
