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Holidays Bill still has major systemic flaw

31 August 2004

Holidays Bill still has major systemic flaw

The Holidays Amendment Bill makes some essential changes to the legislation introduced earlier this year, says Business NZ.

Chief Executive Simon Carlaw says removing the requirement to pay penal rates on top of penal rates and ensuring that employees who call in sick on a public holiday are not paid as if they had actually worked on the public holiday restores some reality to poorly drafted law.

"This recognises some of the issues identified by Business NZ following the problems experienced by a number of employers over the Easter and Anzac Day holidays," Mr Carlaw said.

"The Bill also allows employers to request a medical certificate before three days' absence if they have reasonable cause to suspect the sick leave is not genuine - this also makes sense, although the requirement for employers to pay medical costs in those cases will make it uneconomic to address the problem of repeated one-day absences by employees determined to take advantage of the legislation.

"Unfortunately however, the Bill has not addressed the major systemic flaw of relevant daily pay. Relevant daily pay (which can include extras like incentive, overtime and other payments) is still to be used as the basis for calculating payment for public holidays, alternative holidays and sick or bereavement leave. As all these are instances of non-productive time, ordinary pay would be more appropriate. It should be remembered that ordinary pay was the accepted payment basis for more than 50 years, before the select committee last year inserted relevant daily pay without consultation.

"By continuing to require relevant daily pay instead of ordinary pay as the base rate for calculating payment for public holidays, the Government has chosen to continue to inflate wage costs for many employers. The increased costs are significant. Meat processing companies, health boards, transport companies and others have each calculated their annual increase in the millions of dollars.

"Relevant daily pay also creates a perverse incentive - it means an employer can't pay an employee more for working than for not working. Regrettably, an incentive remains for employees to take a sickie on days that pay best."


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