The terms of reference make for interesting reading (here). The task force will be made up of employer, employee and government representatives and the scope of the review is extremely wide.
It’s encouraging that such a review is taking place, but it’s clear that the group faces significant challenges. The task force has been given 12 months to provide recommendations (assuming they are able to reach agreement during this time). It is then anticipated that a further 12 months will be required to draft and pass any new legislation, followed by a further 12 months to allow system providers to make changes.
Changes at least three years away
Realistically it will be three years or more before employers may get any relief from the existing complexities of the Holidays Act. What’s more, the terms of reference make it very clear that the scope of the review does not include issues of historical underpayments, which means that the existing Act may remain relevant for employers for many years to come.
In fact, to be specific, claims relating to non-compliance with the Holidays Act can be sought back for six years from when the issue is identified. With the clock stopped from when the issue is brought to the attention of the enforcement agency, there could be nine years of remediation to deal with by the time the Holidays Act is actually overhauled!
In addition, companies may need to engage an audit firm to demonstrate independence and help with the remediation process adding significant cost, and there is the risk of brand damage to employers who have transgressed. If employers have underpaid their staff, they may have to advertise this fact, in order to communicate with people who may be owed money, but no longer work for the organisation.
Getting it right - now
Given that any changes are at least three years away, it’s critical the employers understand and can work with the existing act now. We advise all employers to read the MBIE guidance on the Holidays Act so you understand what this means for your organisation.
The following steps will also help ensure your organisation remains compliant:
We also advise employers to keep thorough, up-to-date records on their employee’s pay and hours, as missing data can make the auditing process much longer.
Datacom and the existing Holidays Act
Datacom is committed to make working with the existing Act easier despite the uncertainty that exists in the future. To help, we have been working on making changes to better handle situations where employee’s working weeks change and how this effects their annual leave entitlements. Fundamentally, we are working on a system that holds annual leave balances in weeks, just like the existing Act states, but still allow employees to take leave in hours or days, just like employees are used to. We think this approach will make things much easier to administer from a compliance perspective, while still providing employees with the flexibility that they are used to when taking leave. We’ll have more on this topic in a future article.
For advice on how to ensure your organisation is compliant with the Holidays Act, please contact Datacom on 0800 72 97 97 or send us an email through the link below: