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Proposed changes to the Holidays act (2022): Major overhaul | BuckettLaw

Proposed changes to the Holidays act (2022): Major overhaul

December 24th, 2021

This is the first major overhaul of the act since 2003. 

The government has accepted the Holidays act taskforce recommendations.  

Changes to be introduced into parliament mid next year are set to make payments clearer, transparent and simpler.  

Further the recommendations seek to align with modern work practices where employees work flexible and variable hours.

The recommendations revise the calculations for the payment of leave entitlements to make them more transparent.  

The proposed changes include new calculation methods and tests to determine such things as an “otherwise working day” and for determining how much leave an employee needs to use for a period of time away from work. 

The recommendations revised tests for determining leave eligibility, and new processes for leave calculations.       

One of the recommendations is the ability for employees  to take holidays in advance on a pro rata basis referenced to the length of service. 

Currently the entitlement is to 4 weeks per year with no entitlement to take leave until the completion of 12 months. 

Bereavement leave, sick leave and family violence leave will also be available from the first day of employment.

Bereavement leave will be widened to 3 days leave for more family members including cultural groups and more modern family structures.

 Employees returning from parental leave will be paid at their full rate for all their annual holidays.   

Rules for holiday pay for casuals and holiday pay are to simplified.

Closedowns will be affected by changes to reflect transparency and lessen any disadvantage to employees.

The inclusion of discretionary payments such as bonuses and commissions will be clarified to ensure that the holidays you take are based on what you have been paid. 

This will require employers taking a careful look at how they pay incentive schemes such as bonus and commission payments if they don’t want them to be included in the holiday pay calculations.

The changes will mean adjustments to payroll systems. However, the cost will now be backend alleviating hopefully the costly risks of getting it wrong. 

There will be a transition stage before the act comes into force to allow for the implementation of the changes through payroll systems.

Have your say:

The changes have yet to be implemented. The government expects to introduce legislation-based on the recommendations into parliament early 2022. The process will provide an opportunity for employers to have their say through the select committee stages of the bill. 


Please contact Buckett Law for advice and assistance on how this effects you.

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