Holidays Amendment Act Submission

Posted By TEU on Sep 21, 2010 |

Submission of the Tertiary Education Union

Te Hautū Kahurangi o Aotearoa

To the Transport and Industrial Relations Select Committee on the Holidays Amendment Bill

17 September 2010

For further information, contact:

Sharn Riggs
National Secretary
Phone (04) 801 5098


This submission to the Transport and Industrial Relations Select Committee is made on behalf of the Tertiary Education Union – Te Hautū Kahurangi o Aotearoa (TEU). The TEU is the professional association and industrial union representing 11,000 academic and general staff members who work in polytechnics, institutes of technology, universities, whare wānanga, private providers, other tertiary education providers, WEA, and REAPs.

The TEU generally supports the proposed changes in Clauses 5 and 12 of this Bill, being the calculation of pay for leave and holidays and the transfer of holidays.  These are a result of the Ministerial Advisory Group, which the CTU had representatives on, that considered matters raised by the review of the Holidays Act in 2009.

The TEU supports the proposed changes in Clause 7 in relation to entitlement to be paid for leave which falls during a closedown period. This will address the concerns that TEU have had about the recent Employment Court decision   NZEPMU v SCA Hygiene Australasia, 10 June 2010. This may have impacted on all tertiary education organisations, which over the last few years have started to use closedown period provisions.

The TEU also supports the proposed change in Clause 8 clarifying the meaning of gross earnings by explicitly excluding non-taxable reimbursements for actual costs incurred.  However, subsection (2), which excludes any payment made from an employee’s sale of his or her fourth weeks leave, should be withdrawn along with the entire sale of holiday provisions. The TEU is totally opposed to the sale of the fourth weeks leave as outlined in Clause 9 of this Bill.

We also oppose the arbitrary and authoritarian decision to hand the control of employees’ alternative holidays to the employer, contained in Clause 13.

We oppose the proposal that would give employers the right to demand a medical certificate for one day’s sick leave, where there is no good reason to do so. The current provisions already allow an employer to do this where the employer can demonstrate a reason to make such a request.

We note with concern that the Act Party had a major influence on the current Government to include these proposals, as was reported in the New Zealand Herald on 27 August 2010. It is important to note that when the Labour-led Government increased the minimum annual leave entitlement from three weeks to four weeks in 2004, both the National Party and the Act Party opposed this change.

The proposal to buy out up to one week of the statutory annual leave entitlements is predicated, in the TEU’s view, on this Government’s broader opposition to a fourth week per se, and shows the Government’s intent to minimise its use wherever possible. In Australia employees have had entitlement to four weeks annual leave since 1974.  New Zealand employees had to wait 30 years to achieve the same entitlement. Given this Government’s statements about gaining parity with Australians’ employment conditions as a long term goal, it seems totally illogical that the Government is proposing to reduce this entitlement.

Further, this Bill is being considered at the same time as the Employment Relations Amendment Bill No 2 and the Employment Relations (Rest and Meal Breaks) Amendment Bill. These Bills propose reducing fair and reasonable minimum entitlements for New Zealand employees, under the guise of an alleged need for greater work place flexibility and productivity.

The TEU endorses the submission from the New Zealand Council of Trade Unions Te Kauae Kaimahi.

The TEU wishes to speak to this submission at the select committee.

1. Sale of fourth week’s holiday

  1. As already stated the TEU is totally opposed to the sale of the fourth week’s annual leave – irrespective of the ‘protections’ in the s Bill.
  2. Despite the protections, the ‘option’ to sell will inevitably be forced on the most vulnerable workers, due to the inequality of bargaining power between employer and employee.
  3. Rather than treating leave as a basic right, the ‘buy out’ proposals treat leave as something with little more than an immediate monetary value.  This is in contradiction to the recognition contained in the current Act that employees should have time for rest and recreation.  The current four week entitlement also promotes work/life balance.
  4. The TEU believes it will not generally be the well-remunerated, higher-skilled workers who ‘choose’ to sell leave back to their employer. In many instances those workers will already have leave entitlements above the statutory minimum, achieved through collective bargaining.  Additionally, their higher income will mean they have less financial incentive to sell their leave.
  5. Instead, it will be those who earn the least in our society who will consider selling their leave. These will tend to be the most vulnerable – many will be in precarious or casual or part-time employment, with little financial security.
  6. The so-called ‘protections’ in the Bill (“must be a genuine agreement between the employee and the employer, which can only be instigated by the employee”) ignore the reality of the unequal power balance in the employment relationship. The most vulnerable workers in our society will be unlikely to withhold such agreement if it would risk their ongoing employment.
  7. The regulatory impact statement in the Bill notes a key benefit of this proposal to be to “assist employers where there are labour/skills shortages”. In the tertiary education sector, where most academic staff are in specialised research and teaching areas, this could lead to possible pressure by some employers to encourage the “buy out” for some or all of the fourth weeks leave.
  8. The ability to ‘buy out’ the fourth week’s annual leave will have a particularly detrimental effect on women workers. Women are more likely than men to be in low-paid jobs and part-time work. Pressure on women to sell off their annual leave will be harder to resist in these jobs and other financial pressures facing women may result in more pressure to sell off their annual leave. This would be to the detriment of their own, and their family’s health and wellbeing. Having entitlement to paid holidays is particularly important for women with school-age children.
  9. The general policy statement on page 3 states that “[e]mployers may have a policy that the employer does not have to consider an employee’s request to have a portion of his or her annual holidays paid out. Employers are expected (but not required by the Bill) to consult their employees on the development of any policy preventing  the payout of annual holidays and advise potential new employees of the policy before they accept an offer of employment”.  The TEU suggests this clearly demonstrates the reality of the ‘balance of power’ between employees and their employers.  Most employees do not negotiate their terms and conditions of employment; they usually accept what they are offered in order to take the position.
  10. In the explanatory note of this Bill includes the statement, “allowing a portion of an employees annual holiday entitlement to be paid out provides employees with more choice about how they exercise their minimum entitlements to annual holidays.” This is a complete misrepresentation of the term ‘choice’. There should not be choice about statutory minimums – that is why they are minimums. The legislation does not allow employers to pay less than the minimum wage – even if an employee might choose to accept it.
  11. Long working hours are inevitably contributing to a tailing off in work performance, burnout, stress, and declining participation in family and community. Aside from directly helping to reduce absenteeism and sick leave, workers need adequate rest to sustain high performance over a long period. In particular they need a complete break from work at regular intervals.
  12. In the general policy statement of the Bill, the primary driver for allowing employees buy out up to one week of the statutory minimum leave is the supposed demand for employees to generate more personal income. It is the TEU’s view that that leave is a right and not a commodity.  Where low salaries and wages exist, they should be addressed through fair collective bargaining rather than trading terms and conditions of employment. We regard the buying out of leave to be totally inappropriate in our sector and in New Zealand as a whole.
  13. The Department of Labour has not taken a position on the sale of the fourth week of annual leave, “due to a lack of evidence around the implications of this option”.  Given this lack of evidence to support the proposal there is no need to change the current Act.  As previously stated, we regard this proposal and those contained in the Employment Relations Amendment Bill No 2 and the Employment Relations (Rest and Meal Breaks) Amendment Bill as anti-employee and driven by a right-wing employer-focused Government.
  14. In addition to the already-addressed contradictory nature of the ‘choice’ on offer, the regulatory impact statement for this Bill makes two further fundamentally flawed statements about the possible benefits of buy out.
  15. This Bill will have the effect of reducing employee’s access to rest and recreation; increasing working hours; negatively impacting on health and safety; and having a disproportionately negative impact on groups of workers who are already disadvantaged and vulnerable.

2.         Transfer of Public Holidays

  1. The TEU believes there is value in the whole community having a number of common holidays, to allow communal activities that are otherwise very difficult to organise given the number of people working on weekends and evenings. Arbitrary and widespread transfer of observance will undermine this.
  2. On the other hand there is an understandable desire to be able to transfer among some employees for very valid reasons, including longstanding and widespread practice, such as with Southland’s provincial Anniversary Day. We therefore support the principle of transfers subject to strong protections. Those protections include employee agreement in writing (individually or through a collective agreement), requirements for the new day to be identified and identifiable and not a public holiday, and that the transfer should not be intended to reduce the requirement to pay penal rates on a public holiday.
  3. We also note that that in replacing s.44A (Clause 12) an existing provision has been omitted, namely “(3) To avoid doubt, a period of 24 hours agreed under this section to be treated as a public holiday is a public holiday whether or not the employee works during that period.” This means that if arrangements are made to move part of a public holiday under this section and then the employee takes holiday or leave for that period, any entitlements they would have had, including in their employment agreement, as a result of it being a public holiday may no longer apply. Clarity on this matter would be useful.
  4. On balance we believe there are sufficient protections in this Bill, and therefore support these clauses, but have continuing concerns at the potential effect on communities. We submit that the working of these provisions should be kept under review.

3.         Alternative Holidays

  1. The TEU opposes Clause 13 of this Bill which provides that if an employer and employee cannot agree on the matter of an alternate day’s holiday, employers can determine when employees who have worked on a public holiday may take an alternative holiday.
  2. This is a distrustful and petty extension of employer power. It reverses of the current position where the employee may choose when to take the alternative day, but if he or she has not done so within 12 months the employer may determine the day. The proposal gives complete power to the employer to determine an employee’s leave after the employee has potentially had his or her social life disrupted as a result of working on a public holiday.
  3. The current provisions recognise that a worker has worked on a day of significance to the country. It then allows them to choose another day of significance to them to replace this day.  A worker that for example works on Christmas day earns an alternative days holiday and can then within the first 12 months elect when to take that day including on another day important to the work (a child’s birthday for example). The worker is required to take into consideration the employers needs in electing the day.  This provision goes some way to acknowledging that some workers will still be required to work even on days when most other family members are able to spend time together.
  4. We have seen no evidence why it should be considered, let alone strong enough evidence to justify it, and strongly oppose it.

4.         Proof of Illness

  1. The TEU opposes Clause 14 of this Bill which proposes amending section 68(1A) of the Holidays Act to remove the current requirement that in order to make a  request for a doctor’s certificate for illness within the first three days of sick leave, the employer must have reasonable grounds to suspect that the sick leave is not genuine.
  2. This change, which would enable an employer to request a doctor’s certificate from an employee after a single day’s leave, is draconian, unreasonable and unworkable.
  3. There has been much public reaction to this proposal from employees and employers across New Zealand indicating that they do not see the need for this change.  We believe the proposal is being supported by the Government because of pressure from a small group of employers, mainly from the meat industry, and encouraged by the Act Party.
  4. There has been no evidence presented in support of this change other than “to reduce compliance costs”. The report of the Ministerial Advisory Group on the Review of the Holidays Act contained only a brief mention of this, on page 75, (para 327) making reference to a number of comments (from submitters) “on proof of illness”. The issue raised very little discussion in the Ministerial Advisory Group other than the sensible suggestion that it should be dealt with by agreement within each workplace.
  5. The Minister’s spokespersons have agreed that there is a dearth of objective information but have spoken of there being “compelling anecdotal Information”. The TEU asserts that a law that affects two million people on a daily basis should not be significantly changed merely on the basis of anecdotal information.
  6. This proposal will particularly impact on women who are usually the primary caregivers in the family. The requirement to obtain a doctor’s certificate for a sick child who may have only a minor illness for a single day’s absence places an undue burden on the employee.
  7. In fact this proposal is counter to what doctors recommend for many illnesses such as the flu, which is to stay at home. This advice is aimed at preventing the spread of infection as well as acknowledging that for many viruses and infections, the only cure is rest and recuperation.

5.         Penalties for non-compliance

  1. The TEU is not opposed to the increase in penalties in clause 15 but does not believe that increasing them will make any real difference to employer behaviour. We believe there will be many employers who will try to pressure employees into the buy out of the fourth weeks leave.
  2. We note, however, that a breach of transfer of holiday’s provision is not subject to these penalties.  We submit that sections 44A and 44B should be added to the provisions subject to these penalties.


The TEU does support the need for some adjustment to the Holidays Act as identified by the review and work of Ministerial Advisory Group. However this Bill goes well beyond those discussions and into areas where there was no discussion by the Advisory Group, let alone agreement. Overall we believe the proposals in this Bill to be excessive and punitive particularly in the areas of sick leave. These proposals and those around the sale of the fourth week’s annual leave and the transfer of an alternative day, are not founded on evidence but are politically and ideologically motivated.

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