Legislation update: proposed increase in sick leave entitlements

In line with their election promises, the Government has introduced the Holidays (Increasing Sick Leave) Amendment Bill (Bill), which is set to double the minimum employee sick leave entitlement from 5 days to 10 days per year. Below we set out what you need to know about this upcoming amendment.

What will employees be entitled to?

New employees will be entitled to 10 days sick leave after they have completed their first six months of employment.

Employees who have worked for longer than six months, will be entitled to 10 days sick leave once they have reached the anniversary of the first time, they completed six months of employment with their current employer.

The current position which allows any unused sick leave to be carried over, up to a total of 20 days each year, remains unchanged.

When will this change take effect?

The Government has said that they expect to pass the Bill by the middle of 2021, with changes coming into effect two months after it passes.

What do employers need to do, to prepare for this change?

Employers should update their employment agreements to reflect the new entitlements. We recommend employers do this by way of letter to their employees. It is not necessary to enter into new agreements.

Employers may also wish to check with their payroll providers to ensure payroll is set up to deal with the amendment, with accurately recorded anniversary dates for existing employees.

In terms of possible additional costs, Workplace Relations and Safety Minister Michael Wood has said that employees will not “suddenly have more sick leave”, as the entitlement will come into effect at different times for employees, depending on when they were employed.

However, our advice would be to get prepared for the law change before it occurs to ensure your business is prepared for the changes and compliant with the new employment entitlements.

Increased sick leave – the way of the future?

At present, employees in New Zealand are entitled to less sick leave days than most other OECD countries such as Australia and most of Europe.

However, many employees in New Zealand do have a higher amount of sick leave than the statutory minimum, which can be available under their employment or collective agreements. A few companies are also moving towards models which allow for increased sick leave days, or in some instances even ‘wellness leave’ allowances.

In the current COVID-19 environment, employers are being encouraged to keep un-well employees away from the office. It is expected that the increase in sick leave allowances will assist employees in taking time off when they are un-well, which in turn, will limit transmission of illnesses to other employees, and make for a healthier workplace.

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