Widespread dissatisfaction with Holidays Act

22 March 2005

Survey: Widespread dissatisfaction with Holidays Act

A large-scale survey of business has found widespread dissatisfaction with the Holidays Act.

Business NZ received replies from more than 1,500 enterprises across all industry types in New Zealand.

74% said it had increased cost for their business.

38% of all respondents said the Act had added up to 2% extra payroll cost. 22% said it had added 3-5% to payroll. 12% said it had added more than 5%.

45% of the businesses surveyed had difficulty explaining the holidays changes to employees.

Business NZ Chief Executive Phil O'Reilly said the questionnaire had drawn the largest response of recent surveys, and indicated the depth of concern in the business community about the new law.

"The 'relevant daily pay' formula used by the Act is definitely part of the problem. It sweeps all sorts of additional payments into holiday and leave payment rates, significantly inflating leave costs for many employers.

"And it has other counterproductive outcomes. It means the employer may not pay the employee more for working than for not working; it means employees may earn more by not being at work; and in several industries it means employees have less incentive to produce, so productivity diminishes.

"The overall complexity of the Act is another part of the problem - both employers and employees are finding it difficult to understand and apply.

"We have presented the findings to Government and we intend to present a number of solutions for the Minister of Labour to consider.

"Among other things, the formula for calculating holiday pay should be changed back to something like the 'ordinary pay' formula that was in the previous Act, and the Act needs to be simplified," Mr O'Reilly said.

Survey results are on www.businessnz.org.nz Contact: Kathryn Asare 04 4966556

Survey participant comments included:

"...calculations to ensure employees are being paid according to the new Holidays Act are very time consuming..."

"...calculation of payments is very difficult for those working variable hours..."

"...exorbitant cost when employee takes holiday immediately after they have worked a public holiday resulting in $11 an hour employee having the right to holidays paid at $27 per hour..."

"...it has made it very difficult for us as a small business to do our own wages each week..."

"...we are in a seasonal packing industry operating January to April - within this period we have several public holidays, but if we operate on these we face the punitive cost of 2.5 times normal labour costs - we have no option but to shut down on these days...."

"...our daily rate of pay for sickness used to be $108, it is now as high as $285 ...staff now take more time off since this was introduced...now all sick days are being taken..."

"...estimating holiday payments for those on commission is complicated and unrealistic, particularly if the previous 4 weeks included a big promotion drive - payments under this principle are proving ridiculously large..."

"...this Act has cost our business in excess of $25,000 per year..."

"...we are in the business of processing clients' payroll...across the board there has been an estimated 20% increase in the time taken to process payrolls following the introduction of the new Act..."

ENDS

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