Holidays Act overhaul delayed until after the election

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Carmel Sepuloni
Photo: RNZ/ Samuel Rillstone

The government has missed yet another deadline for replacing the tangled Holidays Act.

A payroll specialist says that leaves businesses second-guessing how to update their payroll systems.

The government promised five years ago to do away with the current law that has exposed organisations to billions of dollars’ back pay for breaches of leave and shift work pay. But a new bill is still being drafted, and time has run out to introduce that to Parliament before the election.

“Taking the time to get this right will help us avoid the issues that the current act has caused for everyone,” Workplace Relations Minister Carmel Sepuloni said on Wednesday.

“I’m not prepared to see a repeat of the current issues and recognise the importance to get this right first time.”

David Jenkins of the Payroll Practitioners Association said on LinkedIn this was just “spin and hype” to cover for what so far was just an unworkably complex draft bill.

He was on an industry working group that had heard very little from officials since December, and when they did, it was rushed.

“We’d have meetings then they didn’t answer questions… it was more like lip-service. They don’t understand payroll.”

Many government departments have already invested in new payroll systems. That might be okay for them, with big budgets to overhaul them again to fit the new law if need be, but regular businesses were increasingly stuck, Jenkins said.

“It’s dangerous at the moment to move from one payroll system to a new payroll system, ’cause that new payroll system may not be able to meet the requirements… It’s a mess.”

Sepuloni said the priority was to get the changes right and “provide employers with the detail and clarity they need”.

“The size and scope of the Holidays Act and changes required mean that a significant amount of time and resources are required to achieve this,” she said in a statement to RNZ.

“I am committed to introducing these important changes after the election.”

The Ministry of Business, Innovation and Employment echoed this, and gave itself an out in a memo to the industry working group.

“Drafting a bill of this size and scope that accurately reflects the policy intent of the recommendations and existing provisions, provides the detail and clarity employers need, and is as accessible and simple as possible to implement is a highly technical process,” it told them.

“The decision not to introduce the bill this term may be disappointing, but I am sure you will agree that it is equally important that we get the details of the bill right.”

The biggest payouts from Holidays Act breaches will be from public hospitals, which have just begun paying back an estimated almost $2b to tens of thousands of staff and ex-staff.