The proposed sick leave extension

sick leave nz

It’s important to note that this is not yet law – these are proposed changes but the Bill will come into effect two months after it has passed as a law, which could be mid-2021.

The Government has introduced the Holidays (Increasing Sick Leave) Amendment Bill to increase the minimum employee sick leave entitlement from 5 days per year to 10 days per year.

The Bill proposes that:

  • the maximum amount of unused sick leave that an employee can be entitled to under the Act will remain 20 days
  • every employee would be entitled to 10 days’ sick leave each year (provided they qualify based on the existing conditions), regardless of their working pattern
  • employees will receive the increased entitlement on their next sick leave entitlement date after the law commences (rather than all employees receiving the additional sick leave on the same day).

What this means for Employers:

  • While the main benefit of this extension is seen to be for employees, it is hoped that employers will see a more productive and healthier workforce from lower staff turnover and a lower risk to customers and staff from exposure to sickness while present in the workplace.
  • Employers will pay for the increase in sick leave and for some, it may mean increasing labour costs and costs associated with finding additional cover for staff who are on leave.
  • There could be marginal costs involved with the transition or updating payroll systems.
  • Employers may choose to absorb these costs by reducing profit or by passing on the costs by increasing the price of their goods/service. SME’s may be more affected by these changes due to having a smaller payroll.

Other points to note:

  • Sick leave is not pro-rated in any way. If you only work three days a week, you still have the same sick leave entitlement as someone working five.
  • It is unlikely the sick leave extension will affect contractors since contractors do not get the same protections as employees.
  • More sick leave will surely help working parents and more support will help employees stay home when sick.
  • Submissions have now closed and are under review by the select committee.
  • The minimum wage is also increasing on the 1st April 2021 to $20.00/ hour for adults. More info on this subject to come!