By Vaughan Granier

The Holidays (Increasing Sick Leave) Amendment Act has passed the final hurdle in the legislative process to become law. On Monday 24 May, Royal Assent was received for the changes to the sick leave provisions of the Holidays Act, giving employers until Saturday 24 July 2021 to prepare for the cost impacts of increased sick leave entitlements. This article outlines the latest update to help businesses prepare for the changes.

What are the new sick leave provisions that will come into force on 24 July 2021?

In brief, the Holidays Act 2003 will amend sick leave requirements so that:

  1. Sick leave entitlement is increased from five days to ten days per year;
  2. Sick leave entitlement that can carry over from year to year will decrease from 15 to ten days. This change balances out the increase in annual sick leave so that accruals remain constant (keeping the maximum employer liability for paid sick leave the same as before the change); and
  3. The maximum cap on sick leave entitlement of 20 days remains the same.

At this stage, other proposed changes, such as having access to sick leave from day one of employment and a stepped approach to acquiring additional sick leave days until an employee has reached the maximum entitlement, have not been brought into law.

How will the new sick leave entitlement be implemented?

Below are some key points to note on the implementation of the increasing Sick Leave amendments:

  1. Existing employees will not immediately become entitled to the increase in sick leave;
  2. On your employees’ next sick leave anniversary post-24 July 2021, they will receive the new entitlement of ten days rather than five;
  3. If your employees don’t take all their sick leave, their excess leave may carry over up to ten days (rather than 15 as previously) to the maximum cap of 20; and
  4. As an employer, you may now be at full liability for the 20 days of sick leave for a new employee after only two years. Where it used to take four years without illness, for an employee to accrue the maximum entitlement of 20 days, now an employee will accrue the full entitlement in only two years.

How should businesses prepare for the sick leave changes?

There are a couple of important contractual and policy areas that you’ll need to check (and amend if necessary) before the law comes into force in July, these are:

  • All new employment agreements from 24 July 2021 should refer to the new entitlements and carryover amounts; and
  • If your existing employment agreements and policies already provide entitlements above the minimum (for example, if your employees already get ten and not five sick days) you should ensure your employees don’t become contractually entitled to five extra days on top of those provided in the Holidays Act 2003 – ten days could unintentionally turn into 15 days of leave.

If you’re a business owner who doesn’t already offer extended sick leave entitlements, you must assess the cost impacts of the sick leave increase and budget accordingly.

Undoubtedly, supporting workers to stay home when ill is beneficial for infection reduction and the health of others at work. But, it can also conceivably result in the need for managers and business owners to be more proactive around absenteeism. If you need some practical tips on managing inappropriate use of sick leave, I share some advice on this blog.

If you have any questions about how these changes to sick leave entitlements may impact your workplace, please do not hesitate to contact the team at HR Assured.

For HR Assured clients, contact our 24/7 Telephone Advisory Service.

Not an HR Assured client and need some advice? The team at HR Assured can support your business on a range of workplace matters. Contact us today to arrange a confidential, no-obligation chat.

Vaughan Granier is the National Workplace Relations Manager for HR Assured NZ. He has over 24 years of experience in international human resources, health and safety, and workplace relations management. With over 10 years working in New Zealand and Australian companies, he provides in-depth support to leadership teams across all areas of HR, Health and Safety, and employee management.