We need a simple Holidays Act

Politik reports:

The Ministry of Health has now spent $50 million on consultants and held three years of meetings while it watched its liability for an unpaid holiday pay increase for health workers by $150 million a year. The Ministry has not paid the correct holiday pay to 260,000 current and former health workers since 2015. It is estimated the pay error could now cost the Ministry $1.8 billion.

So the Ministry of Health has had to spend $50 million on consultants just to work out how to properly calculate holiday pay, and it seems they may own $1.8 billion.

If the Ministry of Health with $50 million of consultants can’t work it out, then how are small businesses expected to comply?

We need a total rewrite of the Holidays Act so that the rules are clear and simple, and can easily be incorporated into payroll software.

Here’s one way you could do it.

• Convert all annual leave entitlements into a percentage of wages so a four week entitlement is equivalent to 8%, five weeks to 10% etc.
• Every pay period, just calculate their annual leave as if they were casual staff, but don’t pay it out. So if your wages were $2,000 you get $160 credited to your annual leave account.
• When you wish to take annual leave you get paid your normal current wages and it is debited against your annual leave account. So if you take 3 days leave and normally get paid $200 a day you have $600 debited
• When you leave your job you get out any outstanding balance

Keep it simple.