Sick leave changes to take effect

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The Holidays (Increasing Sick Leave) Amendment Act 2021 has received its Royal Assent, having passed its final reading in Parliament last week.

The Act will come into force on 24 July 2021, amending the provisions of the Holidays Act 2003.

The Act increases the sick days available to employees from 5 days to 10. It also reduces the amount of unused sick leave that can be carried over each year, down from 15 days to 10. The maximum amount of sick leave an employee can hold unused will remain at 20 days.

Under the Holidays Act, employees become entitled to sick leave after six months continuous employment. This is their sick leave ‘anniversary date’. Employees are then entitled to sick leave in each subsequent 12-month period of employment, beginning at their anniversary date.

So, for example, take an employee who has been employed since 20 January 2021. They become entitled to sick leave on 20 July 2021. They will be entitled to only 5 days, because the new law won’t yet be in force. On their next sick leave anniversary, 20 July 2022, the employee will receive 10 days sick leave.

On the other hand, take an employee who has been employed since 20 June 2021. Because they will have been employed for less than six months when the Act comes into force (on 24 July 2021), their entitlement to 10 days sick leave will occur on 20 December 2021 (that employee’s six-month anniversary).

These changes were spurred by the COVID-19 pandemic, but are the result of a longer-running debate about the adequacy of New Zealand’s sick leave provisions. The change will bring New Zealand in line with many other OECD nations.

Employers should ensure that they are prepared for when this change comes into force, by reviewing existing policies, systems and agreements in relation to sick leave. Employers should ensure that their documentation is compliant with upcoming changes. If employers already offer enhanced sick leave over and above the Holidays Act, employers should now consider whether the sick leave they offer should remain at the new level under the Holidays Act, or whether it should be increased above this new Holidays Act level.

For more information or specialist advice, please contact a member of our employment team.


Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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