3.02.2021

Increase in sick leave entitlement – what you need to know

The Holidays (Increasing Sick Leave) Amendment Bill (the Bill) was introduced in December 2020 and passed its First Reading on 1 December 2020. With the government’s clear majority, the Bill is anticipated to pass in mid 2021 and come into force two months after.

The purpose of the Bill is to increase the availability of employer-funded sick leave for employees to ensure that employees have better access to sick leave when they, or their dependents, are sick or injured.

The Bill will bring New Zealand in line with Australia by amending the Holidays Act 2003 (the Act) to increase an employee’s entitlement from 5 to 10 days’ sick leave per 12-month period. It also proposes to amend the Act to reduce the number of unused sick leave that may be carried over from 15 (current) to 10 days per year. The maximum entitlement to sick leave at any one time remains the same at 20 days. 

If and when the Bill comes into force, new employees will be eligible for 10 days’ sick leave after working for six months and the entitlement for existing employees will increase to 10 days when they next become entitled to sick leave for a 12-month period.

There are important implications to note as a result of these proposed, but likely, changes.

Neither the Act nor the Bill provides for pro-rating of sick leave.  This means that a part time employee has, and will continue to have if the Bill is passed, a greater proportion of sick leave than a full time employee.  For example, an employee that works 5 days a week, who currently gets a minimum of 5 days sick leave, will have his or her entitlement increased to 10 days per year.  This is a total of 2 working weeks a year.  In contrast, a part time employee who works, for example, 1 day a week, who currently gets a minimum of 5 days sick leave a year, will have his or her entitlement increased to 10 days per year.  This would amount to a total of 10 working weeks of sick leave per year.

It is recommended that employers take this opportunity to revisit and review their employment agreements, collective agreements and policies in relation to sick leave. If and when the Bill passes, is your employment documentation compliant?  If you already offer extra sick leave to employees, what are the implications if the Bill passes – does the entitlement remain the same or do employees get an extra 5 days? If employers no longer wish to offer enhanced sick leave entitlements you may need to amend your templates and policies, vary employment agreements with existing employees and speak to unions about the collective agreement clauses. 

If you have any questions about the Bill, or holiday and sick leave entitlements in general, please get in touch with our Employment Law Team or your usual contact at Hesketh Henry.

 

Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

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