Amendment Bill to Increase Sick Leave Entitlements Passes

A bill introduced in December 2020 to increase the availability of employer-funded sick leave has passed its third and final reading and will come into effect on 24^th July 2021.

The Holidays (Increasing Sick Leave ) Amendment Bill will  increase the minimum sick leave entitlement for eligible employees from 5 days to 10 days per year.

While there has been much debate surrounding  sick leave eligibility and the use of a pro-rata system,  the new legislation has clarified there will be no change. This means regardless of whether an employee works 2 hours per week or 40 hours per week, if they meet the eligibility criteria for sick leave, they will receive 10 days sick leave per year.

Transitional arrangements have been set out in the Sick Leave Amendment Bill which means employees will not automatically be entitled to an increase in sick days on 24^th July 2021. Instead,  existing employees will receive 10 sick days when they next reach their entitlement date.  An employee’s entitlement date being either:

• after they reach 6 month’s current continuous service with their employer
  or
• on their sick leave entitlement anniversary (12 months after they were last entitled to sick leave).

Employees who already receive 10 or more sick leave days will  not be affected by the legislation change.

Employees will continue to be able to carry over unused sick leave, but we will see a reduction in the number of days that can be carried over. Under current legislation an employee can carry over up to 15 days unused sick leave to give them an accumulated maximum of 20 days’ in any year.  From 24^th July 2021, employees will only be able to carry over up to 10 days sick leave,  but the maximum of 20 days accumulated leave will remain. Employers will still have the right to allow any employee to carry over additional sick leave entitlements, if they choose to do so.

These are significant changes and employers will need to ensure these changes are reflected correctly in their employment agreements, policies, handbooks and payroll processes.

We are anticipating further details on the remaining Holidays Act changes and expect further information to be released during this year- we will keep you up to date as things progress.

If you would like further information and or advice about  your Holiday Act obligations, the upcoming changes  or employee entitlements, please do not hesitate to contact us.