Holidays Act 2003

The Holidays Act 2003 aims to promote a work/life balance for employees. The Act provides minimum entitlements - which employers and employees can agree to increase - to holidays, sick leave and bereavement leave for employees.

Annual Holidays

  • After 12 months continuous employment, an employee is entitled to a minimum of three weeks paid annual holidays. This minimum will be increased to four weeks with effect from 1 April 2007.
  • An employer cannot unreasonably withhold consent to an employee's request to take holidays.
  • Annual holiday pay must be the greater of the employee's ordinary weekly pay (the amount of pay the employee receives for an ordinary working week) at the beginning of the annual holiday or the employee's average weekly earnings (calculated by dividing the gross earnings over the previous 12 month period by 52 weeks) for the 12 months immediately before the employee's last pay period.

Public Holidays

  • Employees continue to receive up to 11 paid public holidays per year.
  • If the holiday falls on a Saturday or Sunday and the employee normally works on that day, then the holiday remains at the traditional day and the employee is entitled to that day off on pay.
  • If an employee works on any part of a public holiday, that would otherwise be a working day for that employee, the employee must be paid at least time and a half of the relevant daily pay (the amount of pay that the employee would have received had the employee worked on the day concerned) and be given an alternative holiday.
  • An alternative holiday must be a whole working day off, regardless of the amount of time that the employee actually worked on the public holiday.
  • If an on call employee is required to restrict their activities on the public holiday to the extent that they have not enjoyed a full holiday, then the employee is entitled to an alternative holiday.

Shift Workers

  • The recent court decision in Heinz Watties Limited1 confirms that an employer and an employee, who usually works shifts that begin in one calendar day and end in another, can agree that a public holiday be transferred to another day . In such situations, the Employer should ensure that another day is defined in the employment agreement as any continuous 24 hour period, rather than from midnight to midnight on the actual calendar day generally observed as a public holiday.
  • Without any agreement, an employee who works a shift over two public holidays in a row (such as working from 11pm on Christmas Day and finishing at 7am on Boxing Day) must be paid at least time and a half of the relevant daily pay and be given two alternative holidays (one each for Christmas Day and Boxing Day).

Sick Leave

  • All employees are entitled to a minimum of five days paid sick leave per year after they have completed six months current, continuous employment. Sick leave can be taken if the employee, their spouse or a dependent is sick or injured. Part time employees are now entitled to sick leave after being in employment for six months.
  • Sick leave can be carried over into the next year of employment, to a maximum of 20 days current entitlement in any one year. An employee is not entitled to be paid out for any sick leave that has not been taken at the end of employment.

Bereavement Leave

  • An employee is entitled to three days paid bereavement leave on the death of any of the employee's spouse, parent, child, sibling, grandparent, grandchild, or spouse's parent.

Holidays Amendment Act 2004

  • The Act has not been without controversy (being described as a "prime example of how things can go wrong through lack of consultation" 2). The Amendment Act addressed a number of perceived problems and now:
    • An employee who is rostered to work on a public holiday, but who does not work because he or she is sick, is entitled to relevant daily pay only. The day counts as a public holiday and not a sick day, so the employee - who did not work on the public holiday - is not entitled to be paid at time and a half or an alternative holiday.
    • An employer can require an employee to produce proof of sickness for sickness or injury for a period of three or more consecutive calendar days, whether or not the days would otherwise be working days for the employee.
    • Penal rates already included in an employee's pay for working a public holiday are no longer included in the relevant daily pay calculation.

Ensuring Compliance

  • Employers should ensure that their existing employment agreements are amended to reflect the changes and new entitlements, so that:
    • agreements specifically state that an employee will receive at least time and a half for working on a public holiday;
    • agreements have been amended by replacing the old wording Special Leave with the terms Sick Leave and Bereavement Leave ; and
    • if it is likely the employer will want the employee to work on a public holiday (which would not otherwise be a working day for the employee) the agreement states that the employee will work on the public holiday if asked to do so.

1 Heinz Watties Limited v National Distribution Union Inc & Others, Employment Court , Wellington , Judgment No. WC2/05, 11 February 2005

2 Business New Zealand address to the Nelson Chamber of Commerce, 12 October 2004

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document.
If you would like further information on any of the topics in this document, please contact the writer or your usual Auld Brewer Mazengarb & McEwen adviser.
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