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Proposed Changes To The Holiday Act – Increasing Paid Sick Leave

Published January 04, 2021 (last updated February 24, 2021) -
Workplace where employees are on sick leave

COVID-19 has had a huge impact on the way businesses operate. Employers have had to reconsider their approach to sick employees in the workplace in order to make sure employees stay home when sick so they don’t put their co-workers at risk. But staying home when sick places a financial burden on those employees not entitled to paid sick leave, or who have used up their entitlement. 

The Holiday Act 2003 is currently under review and as part of the proposed changes Labour has introduced a Bill to increase the paid sick leave entitlement from five to ten days a year.

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How Much Sick Leave Does An Employee Get Now?

Currently, under the Holiday Act 2003 (the Act) employees are entitled to paid sick leave if they have worked for their current employer for the last six months continuously, or if not continuously if in the last six months they have worked at least one hour per week, and in total at least 40 hours a month.  These employees can get up to five days a year of paid leave in case they, their partner, or a dependant, are sick or injured. Any unused sick leave carries over to the next year, and is added to next year’s entitlement, up to a total amount of 20 days in any one year. Employees get another five days of paid leave each subsequent twelve month period provided they have worked continuously for the past six months or meet the eligibility threshold. 

Part-time and Full-time employees get the same amount of paid sick leave per year once they become entitled to it. Employees only get paid for day they are sick if they otherwise would have worked on those days, so an employee won’t be able to take paid sick leave for days they weren’t rostered to work, for example.

Unused leave can’t be paid out to the employee unless there is a specific provision that allows for it in the employment agreement.

What Are The Proposed Changes To The Holiday Act 2003?

The Holidays (Increasing Sick Leave) Amendment Bill  proposes changes to sections 65 and 66 of the Act. This means that once employees have worked for their current employer for six months they will receive ten days paid sick leave entitlement instead of five.  Employees who already are entitled to paid sick leave when the legislation comes into force will become entitled to ten days sick leave per year on the 12-month anniversary of when they initially completed their six months and qualified for paid sick leave.

Employees can still only have 20 days paid sick leave in total per year (unless their employer agrees to them accruing more), so they can carry over up to 10 (instead of 15) days of unused sick leave from a previous 12-month period.

How Will Sick Leave Work If The Bill Is Passed?

The amendments to the Act will mean more workers can stay at home if they’re sick, as employees will get ten days paid sick leave a year instead of five. However, employees won’t receive the extra days immediately once the amendment comes into force.  Currently, the Bill is drafted to allow a two month grace period once it is passed.  Employees will receive the extra days of paid sick leave depending on when they started work and first became entitled to paid sick leave. This is so that employers can budget accordingly.  Employees can carry over any unused sick leave from the previous year to the next, so they can have up to a maximum amount of 20 paid days of sick leave in any one year. Any changes are not expected to take effect until at least the middle of next year.

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About Employsure

Employsure is one of New Zealand’s largest workplace relations advisers to small- and medium-businesses, with over 5,000 clients. We take the complexity out of workplace legislation to help small business employers protect their business and their people.

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