Major amendments to the Holidays Act 2003

Long-awaited amendments to the notorious Holidays Act 2003 are due to be introduced in mid 2022.

The changes are aimed at providing greater clarity and certainty for employers regarding their rights and obligations under the Act. The aim is for the Act to align with modern work practices where employees are working variable and flexible hours.

Notable changes include:

• Employees will be able to take annual leave in advance, on a pro-rata basis calculated on how long they have been employed.

• Family violence leave, sick leave and bereavement leave will be available from day one.

• Holiday pay for casual employees will be simplified.

• Annual leave calculations will be simplified.

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

• Discretionary payments such as commissions and bonuses will be refined to ensure holidays taken are based on what the employee has been paid.

• A revised definition of Gross Earnings.

Until changes to the Holidays Act 2003 come into force, all of the existing rules still apply. This means that employers still need to comply with the current Act, and ensure they are providing the correct entitlements and payments to employees. 

It is important employers update their employment agreements and policies to reflect these changes and ensure payroll is updated when they come into effect. The changes may require significant adjustments to employers' payroll systems, which could result in additional costs to employers but it would reduce the chance of over or underpaying employees in the future. 

If you need advice on how this may affect your business including ensuring your employment agreements and processes are up to date, or how this may affect you as an employee; contact our expert Employment team today on [email protected] or call 03 441 2743.