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Holidays Act Needs Reform: Simpson Grierson Survey

Holidays Act Needs Reform - Simpson Grierson Survey


Media Release
27 October 1999

Holidays Act Needs Reform – Says Major Simpson Grierson Survey

A major study of the Holidays Act, commissioned by national law firm Simpson Grierson, has found a compelling case for changing an Act founded on principles from a time when employees worked 9am - 5pm Monday to Friday.

The Simpson Grierson Holidays Act Survey had 662 respondents, all employers with 10 or more staff throughout New Zealand. It is believed to be the largest, most definitive survey on the Holidays Act ever conducted.

The survey, conducted by independent research company Marketing Diagnostics and Development Limited, found information that included:
- 51% of employers want the Act repealed or significantly amended
- 57% of employers find the Act ambiguous and unclear
- 51% of employers say they have difficulties calculating pay for annual leave
- 70% of employers seek outside assistance (for example from law firms) to help them apply and interpret the Act
- and, in spite of most employers saying they understand the Act well, a significant proportion of employers are applying it incorrectly in key areas.

“The results are unequivocal,” says Simpson Grierson partner and employment law specialist Phillipa Muir. “The Holidays Act is very confusing for employers. It needs reform – dramatic simplification in parts, change in a range of other areas, removal of confusing principles, and additions to make it more flexible and relevant to today’s businesses.

“Holiday and leave entitlements should be an area where employers and employees clearly and easily understand entitlements and rates of pay. The survey shows they do not. It shows that even when employers think they understand the Act, a significant proportion are applying it incorrectly.”


Holidays Act Survey....2

The Simpson Grierson Holidays Act Survey also shows:

- a significant proportion of employers (19%) do not provide days off in lieu to full time waged employees who work on a public holiday. Yet the Court of Appeal held this to be a requirement under the Act in 1993.
- 8% of employers who provide days off in lieu for public holidays are cashing up unused days for existing staff, a practice that has been held to be unlawful under the Act.
- larger employers (those with 250+ staff) have the most difficulty with the Act, as do those with workforces on shiftwork, working seven days a week, or 24 hours a day. Most of these employers had difficulty calculating pay for annual leave or statutory holiday entitlements.

“The Act was not written for modern business practices, where employees work on weekends, irregular hours, rosters, shift work, part time or on a casual basis. Since the introduction of the Holidays Act in 1981 (which was essentially a consolidation of Acts dating back to 1910) the types of employment arrangements in New Zealand have changed radically. The Holidays Act was written for businesses operating the 40 hour, Monday to Friday, 9am to 5pm working week. It still contemplates the same working environment,” says Ms Muir. “Yet much of our industry today is needed year round and on statutory holidays.

“The Act is so unclear for employers with workforces in these situations, they are left to take ‘best guesses’ when calculating leave and hope they’re right. That’s just not good enough. The law is inadequate when an employer must rely on evolving case law rather than clear statute to find a way through.”

Simpson Grierson said their enquiries outside the Survey showed that since 1991, there have been hundreds of cases where the Holidays Act came before the Employment Tribunal and Employment Court. Of those, several went as far as the Court of Appeal.

One area of key concern in the findings relates to Monday-isation of statutory holidays. When a statutory holiday falls on a Saturday or Sunday (as it does with 25th and 26th of December 1999, and 1st and 2nd of January 2000), the holiday is recognised in law on the Monday and Tuesday following. In that situation, the Monday and Tuesday are deemed the “statutory holiday”.

“So if an employee is rostered on the Saturday, but not on the Monday, he or she is not entitled to a paid statutory holiday or day off in lieu, unless this is specifically stated in the contract. Conversely, an employee who enjoys a rostered day off on Christmas Day and Boxing Day, for example, but is rostered to work on the Monday and Tuesday following, will enjoy the benefit of two further paid holidays,” says Ms Muir.


Holidays Act Survey.....3

The survey also shows:
- 60% of employers do not Monday-ise public holidays, but recognise them on the day they fall, without having contractual provisions which cover this. This is a breach of the Act.
- 50% of employers believe the Monday-ising provisions in the Act do not lead to fair and equitable entitlements for all employees. The expression of “unfairness” is strongest amongst large employers, and those with modern workforces with 24 hour, or 7-days-a-week operations.

“There is significant confusion over what Monday-isation is, and means, and how it should be applied – and that’s demonstrated in the survey. While the large majority of employers apply the same statutory holidays as in the Act, many do not consider they Monday-ise public holidays. One of the key assumptions in the Holidays Act as it stands is that few – if any – people are likely to work on any Saturday or Sunday. But, as a result of this assumption, the Act discriminates against and potentially disadvantages employees in the group that works these days,” says Ms Muir.

In analysing the results of the survey, Simpson Grierson comments in their Survey Report:

- There is a philosophical and troubling issue about the equity of holiday apportionment when employers Monday-ise. Monday-ising benefits the Monday to Friday 9am - 5pm workforce. The net effect is that employees who work those days and those hours are likely to enjoy the full, 11 paid statutory holidays, which is what the Act intended. However, for employees who are not in this group, the Act fails to guarantee them the statutory holidays that Parliament almost certainly intended.

“The concept of moving statutory holidays to the next Monday was introduced in 1910 under the Public Holidays Act, and has remained unchanged. The principle was designed at a time when New Zealand businesses, including retailers, were closed over a weekend. In 1999, the New Zealand workforce is being more and more affected by this issue,” says Ms Muir. “Yet the Act had no intention to limit workers’ statutory holidays to less than 11. This issue needs addressing urgently and immediately.”

In another area, the survey sounded a note of warning. Results showed that employers are not compelling workers to take annual leave. Ninety-two percent of employers allow employees to accrue leave. And of those employers that allow staff to accrue annual leave, 42% allow leave to accrue indefinitely in spite of provisions in the Act which permit employers to compel staff to take leave.

“This has implications for employers and employees,” says Ms Muir. “First, employees may not be taking sufficient breaks from work, which contradicts an underlying principle of the Act. Second, employers may have considerable contingent liabilities for accrued leave growing on their books. Finally, employers are exposed to staff taking very long holidays or they are exposed to large payouts for unused annual leave when a staff member leaves or the business is sold. But the good news is that many employers have arrangements above the statutory requirements.”


Holidays Act Survey.....4

The Simpson Grierson study into the Holidays Act was undertaken in July 1999 by research company Marketing Diagnostics and Development Limited, and initiated by Simpson Grierson’s Employment Law Group. The sample size gives a maximum margin of sampling error of plus or minus 4%, at the 95% confidence level. The 662 employers are statistically representative of the opinions and practices of medium to large New Zealand employers - which, in turn, account for 63% of New Zealand’s ‘full time equivalent workforce’.

The survey results are intended to provide New Zealand businesses with a benchmark of “typical” practice. They are also intended to provide regulators and policy makers with authoritative information about employment practices, to help them advance New Zealand law.

Simpson Grierson's Employment Law Group was set up 10 years ago and was the first specialist employment law practice to be developed by a large law firm in New Zealand. The group is well recognised as a leading team in the area.

Simpson Grierson is a top tier New Zealand law firm, of 54 partners and 450 staff, based in Auckland and Wellington. The firm will deliver the results of the survey back to their employment law clients and those employers who participated in the survey.



PRaxis Public Relations Limited
Bill Moore
Phone (09) 373-5068
Mobile (025) 769-654
Home (09) 817-9257

Andrea Parker
Public Relations Manager
Simpson Grierson
Phone (09) 358-2222

Spokespeople for this release are:
Phillipa Muir or Don Mackinnon
Partner Partner
Simpson Grierson Simpson Grierson

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