The Holidays Act 2003 sets out the minimum legal entitlements for:

Annual holidays
Public holidays
Sick leave
Bereavement leave 

The Act applies to all employees whether full time, part-time or casual.  You will need to review policies and procedures including employment agreements created prior to 2004 to ensure they comply with the current legislation. 

Employment agreements cannot specify that a rate of pay includes allowance for time and a half. 

All agreements must now specify the new provisions of sick and bereavement leave even if current clauses provide for a better award than in the Act.  Failure to do so could result in additional leave entitlements that were not intended.

To download the updated paragraphs to amend your employment agreements click here. New Paragraphs for Inclusion in Employment Agreements.

If your employment agreement already includes provision for time and a half this arrangement can stay in place for 12 months as long as it meets the minimum requirement of the Act.  After this time the agreement must specifically state that the employee is entitled to time and a half.  If the composite rate remains after 1^st April 2005, the employee will become entitled to time and a half of this composite rate!

Annual Leave

As of 1 April 2007, each employee is entitled to four weeks' paid annual leave after 12 months of continuous employment and on the anniversary of the day they started working with your company.  It is strongly recommended that you agree what “four weeks” means to the employee in any agreement and record this agreement in writing. 

For more information on how to manage the change from three weeks' annual leave to four, go to the section on Annual Leave 2007 or contact us at info@hughesdirect.com.

The leave can be taken at anytime as agreed by both the employee and the employer.

The employee must be able to take two weeks' leave at one time.

Public Holidays 

All employees whom work on a public holiday must be paid at least time and a half for the hours that they work. This must be either the employee's relevant daily pay rate, less any penal rates that apply in their employment agreement, plus half that rate again or the relevant daily rate that includes penal rates.

If an employee's agreement already contains an additional rate such as double time for working on a public holiday then the employee will not get time and a half on top of this rate. If the penal rate is less than time and a half then the employer need only top this up to the time and a half rate for the hours worked. Consequently, if an employee works on a public holiday, they will be entitled to whichever is greater of either the rate stated in their employment agreement OR time and a half, as stipulated in the Holidays Act.

Penal rates are defined as rates that are designed to compensate an employee for working on a particular day, such as Saturday, Sunday or a public holiday.

Penal rates are not additional payments for working extra days or overtime, night or shift allowances.

Relevant daily pay is what an employee would have been paid for the day had the employee worked. It includes productivity and incentive payments, overtime payments, penal rates and the cash value of board and lodings. It does not include the payment of time and a half required by the Holidays Act.

ALL EMPLOYEES who work on a public holiday (including ANZAC and Waitangi Days) are entitled to a minimum of time and a half for the hours they actually work on the day.

If the day they worked was a day they were scheduled to work, they get a full day off in lieu, even if they only work part of the public holiday. 

Employees who would not normally work on that day, who may be on-call but not required or who are only employed for that day are not entitled to an alternative day off.

Public holidays are now divided into two types:

Christmas and New Year
Christmas Day and Boxing Day 25 ^th/26^th December and New Years Day and the Day after 1^st /2^nd January, how these days are handled will change from Christmas 2004. 

If the holiday falls on the weekend but the employee would not normally work these days then the holidays will transfer to the Monday and Tuesday so that the employee still gets paid days off.

If the holiday falls on a Saturday or Sunday and the employee would normally work on that day then the holiday remains on the traditional day and the employee is entitled to that day off on pay. 

Waitangi Day, Good Friday, Easter Monday, ANZAC day, Queens Birthday, Labour Day and the provincial anniversary day.

All other days are celebrated on the day on which they fall.  This means that when Waitangi and Anzac Days fall at the weekend and the employee who would not normally work those days has no entitlement to paid days off.

Agreeing to shift public holidays

Previously you could agree with your employee to observe the public holidays on different days but this is no longer the case. Employees now have to observe public holidays on the days outlined in the Holidays Act 2003.

An exception to this applies to shift workers. If an employee's shift falls partly on a public holiday (i.e. it starts on one day and finishes on another), the employee and employer can agree to move the public holiday to a 24 hour period which covers the whole shift.

For example, an employee who works from 10pm to 6am, and the public holiday starts at midnight, they can agree to move the public holiday to run from 6am the previous day to 6am on the original public holiday.  This saves the employee having to come to work for 2 hours and go home at midnight.

This 24 hour period has to start or finish on the original date of the public holiday, and has to cover a whole shift that the employee is scheduled to work.  The agreement has to be in writing and can’t reduce the number of Public Holidays that the employee is entitled to.

Sick Leave

An employee who takes sick leave on a public holiday is not entitled to payment at time and a half, nor an alternative day. The day should be treated as an unworked public holiday rather than as sick leave or bereavement leave and the employee should be paid for the day off.

Alternative Day 

The alternative day can be taken at anytime as agreed by the employer and employee and is paid at the ordinary rate of pay.  If the employer cannot agree then the employee can take the day when they like.  If the employee does not take the day within 12 months then the employer can direct the employee to take the day.  At this time the employee can ask to be paid for the day instead of taking leave and if agreed then the employer and employee must negotiate a suitable payment in lieu of this leave. 

If alternative holidays are outstanding at the time an employee leaves the company then they should be paid at the same rate as the employee's last day.

At 1^st April 2004, any days in lieu already owing become alternative holidays and are treated in the same manner. 

Clauses 

Here is a basic clause you can use to amend your existing employment agreements.

“If the employee works on a public holiday they will be paid at the rate of time and a half for hours worked.”

Sick and Bereavement Leave 

The Holidays Act 2003 now separates special leave into sick and bereavement leave.

Sick Leave 

When each employee has worked for six months' continuous employment they are entitled to five days' sick leave.  They are then entitled to five days' sick leave at each anniversary.  Employees normally called casual because their employment is not continuous also become entitled to sick leave if they average at least 10 hours per week and work at least one hour per week or forty hours per month.

This can be taken in advance with the agreement of the employer and then deducted from any allowance due.  It is recommended that a clause be added to the employment agreement that allows you to deduct monies for any leave overpaid on termination.

Sick leave can be used when the employee or spouse/dependent person is sick or injured.

Unused sick leave can be carried over each year to a maximum accumulation of 20 days but does not form part of termination pay when the employee resigns.

Part-time employees can also get five days per year and accrue a maximum of 20 days.

Employees are required to inform the employer as soon as possible of an intention to take sick leave.  Once the employee has taken thee consecutive calendar sick days for themselves or a spouse/dependent, whether or not these would normally be working days, the employer is entitled to ask for proof such as a medical certificate and can withhold payment for sick leave until this is provided. 

If the employer has reasonable grounds for believing that sick leave is not genuine then the employer can ask for proof such as a medical certificate as early as the first day of sickness. The employee must be informed as soon as possible regarding the need to provide proof and the employer must agree to meet the costs of providing that proof, such as the Doctors consultation fee.

If an employee has special leave left on 1^st April 2004 this automatically becomes sick leave.  So, if for example the employee has an entitlement date of 6^th June 2004, they will then receive 5 days' sick leave in addition to any that they already have remaining. 

Bereavement Leave 

Each employee can take three days' leave per year for the death of an immediate family member.  These are spouse, parent, child, sibling, grandparent, grandchild or spouse’s parents.  Where more than one person dies at the same time the employee is entitled to three days for each death.  The leave can be used for any purpose genuinely relating to the death and does not have to be used immediately.  For example, an employee may take two days off for the funeral and later take a further day to sort out legal issues.

An employee is also entitled to up to one day's paid leave for a death outside the immediate family if the employer accepts there has been a bereavement.  In deciding this, the employer should take into account the extent of the association, the extent of arrangements involved and cultural responsibilities.

Payment is made at the rate of the employee’s relevant daily pay. 

Employees normally called casual because their employment is not continuous also become entitled to bereavement leave if they average at least 10 hours per week and work at least one hour per week or forty hours per month.

Record Keeping 

You are still required to maintain holiday and leave records but the Act has some additional requirements including that the employee must be able to understand and verify their entitlements.  New requirements are in bold type.

You must record:

1. The name of the employee
2. The date employment commenced
3. The days on which an employee works
4. The date the employee last became entitled to annual holidays
5. The employees current entitlement to annual holidays
6. The employee’s current entitlement to sick leave
7. The dates any annual holiday, sick or bereavement leave is taken
8. The amount of payment for any annual holidays, sick leave and bereavement taken
9. The dates of and any payment for any public holidays worked
10. The number of hours worked on any public holiday
11. The date on which the employee became entitled to any alternative holiday
12. The dates and payment of any public holiday or alternative holidays on which the employee did not work, but for which the employee had an entitlement to payment
13. The cash value of board and lodgings provided
14. The cash value of any alternative holidays that the employee has surrendered for payment
15. The date of termination
16. The amount of pay for holidays on termination