The Government wants to overhaul parts of the Holidays Act, which would include some changes to sick leave entitlements. 

1News explains how this might impact New Zealand’s workforce.

Ever since the previous Labour government doubled annual sick leave entitlements in 2021, most of New Zealand’s employees have been entitled to 10 days of sick leave each year, regardless of whether they are full-time or part-time workers.

People are entitled to that leave if they have been working continuously for the same employer for six months or more. 

But that could change in the coming years, with the coalition Government proposing changes to the Holidays Act. 

As well as potentially changing annual leave to an accrual system instead of an entitlement system, it wants to move to a pro-rating system for sick leave.

How does a pro-rata system work?

Pro-rata sick leave is an allocation of leave based on the amount of time someone has worked during a year. 

For example, if a full-time worker is entitled to 10 days of sick leave for the year, a part-time worker who works half the hours as a full-time worker would be entitled to five days of sick leave for that year. 

Minister for Workplace Relations and Safety Brooke van Velden said this week, that a number of businesses were struggling to adjust to the doubling of sick leave entitlements for all eligible workers.

“Workplaces that rely on part-time workers are particularly vulnerable to unexpected staffing shortages,” she said.

“To explore this issue further, the exposure draft set for consultation will include a proposed approach to pro-rating sick leave, to better reflect how much an employee works.”

What do businesses think of the proposal? 

Organisations that represent employers have welcomed the potential changes to sick leave entitlements.

BusinessNZ said a system for pro-rating sick leave was sensible.

The Employers and Manufacturers Association (EMA) agreed, saying “a one-size-fits-all 10 days for everybody [approach] doesn’t work for an employer”.

The EMA’s head of advocacy, Alan McDonald, told Breakfast the organisation was in favour of the pro-rata approach to sick leave. 

“When these changes were made for part-time workers … several organisations said ‘look, it’s not fair the way you’re doing this for part-time workers,’” he said.

“In an extreme example, if you work just one day a week, there are about 45-and-a-half working weeks a year by the time you take out holidays and things, so you might work for 45 days a year and you get 10 days’ sick leave,” he said. 

However, when McDonald used this same scenario during an interview with RNZ, he admitted such an example would happen “[rarely], if at all”.

What do workers think of the changes?

Opposition parties and unions were not in favour of a pro-rata approach to sick leave.

The proposed changes would penalise thousands of women, many of whom work part-time caring for vulnerable people, the Public Service Association (PSA) said.

"It shouldn’t matter if you are part-time or full-time - sickness doesn’t discriminate,” PSA National Secretary Kerry Davies said. 

The New Zealand Council of Trade Unions (CTU) also wanted sick leave to remain unchanged, its Vice President, Rachel Mackintosh, told Breakfast. 

“This is a reduction in sick leave entitlements after the Prime Minister promised that there wouldn’t be any reduction or changes to sick leave,” she said.

“The people it will affect are overwhelmingly women, young people, and disabled people, who are already often in precarious and insecure work.”

Mackintosh said people get sick and sick leave was important to make life bearable and ensure people didn’t lose income or annual holiday leave when unwell.

“People are in different circumstances, and we just say you never create supposed fairness by reducing somebody’s entitlements,” she said. 

Mackintosh said earlier the changes would also force more people to go to work sick, which would ultimately be worse for businesses, families, and the health system.

So, what now? 

An exposure draft of a bill outlining the changes would be released in September, van Velden said.

An exposure draft is different to the usual process of releasing a bill to a select committee for public consultation. 

The exposure draft would go through targeted consultation with selected organisations first. 

It would then go through regular public consultation once the bill is introduced to Parliament.

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