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Sick Leave and Holidays Act changes will cost workers billions in lost wages


The proposed changes to sick leave and annual leave will cost workers billions in wages says Unite Union.


“We know very well  the difference between an annual leave accrual system and the current law looks like because most payroll systems were recently, wrongfully, running accrual systems. The difference is literally billions of dollars. Te Whata Ora alone owes over $2.1 billion to its employees” said Gerard Hehir, Unite Assistant National Secretary

These changes will see a transfer of billions of dollars of wages from workers to employers. The types of workers primarily affected, women, young workers, Māori and Pasifika and the low paid will lose and employers will gain, massively. It is very on brand for an ACT politician, but not what a government supposed to be looking after the interests of everyone should be doing.


The ‘complexity' often complained about is largely to ensure workers get paid the same while on holiday as they would if they were working. Anyone who increases their hours of work over a year will get screwed under an accrual system. If someone is working 20 hours in January and is able to increase that to 40 hours in June, they currently will get 40 hours leave per week the next January. Under an accrual system they will only have 30 hours per week for leave - 25% less. They would lose at least a weeks pay overall.


Other workers who will lose are those with higher hourly pay rates from overtime, penal rates, shift allowances and commissions. These were almost always not included by employers who ran an accrual system, they tended to pay just the base hourly rate for leave, and that had a major impact on many workers.


With sick leave the impact will be on those who need it the most and can least afford losing it. 58% of women in paid work do less than 40 hours a week, so will lose out. They are still, overwhelmingly, the workers who use sick leave to look after children and other dependents when they are sick.

Over 60% of part-time workers are in just four sectors: retail, hospitality, education and health. These are exactly the workers who are most likely to catch whatever illness is going around the community, as a direct result of exposure at work. These are also the workers who will, inevitably be forced to work when sick when their reduced sick leave runs out. That is not good for anyone.


The hypocrisy of this announcement also needs to be pointed out. The aim, supposedly, is to ’simplify’ but we already have a very simple sick leave allocation - 10 days per year for all employees. A pro-rata allocation will massively complicate it, especially for those who hours vary week to week, because their average daily hours will need to be calculated as well as their pay rate.


The complexity of the current annual leave system is because many workers don’t do 9-5 normal office hours and so extra steps have to be taken to make sure they get paid the same as they would as if they were working - which is how it should be. In reality almost all pay systems have now been adjusted to be compliant to the current law - the only remaining complexity is historical, and these proposals won’t change that at all.


Those on regular hours and salaries (which incudes most high paid employees) will not be affected while those working variable and outside normal office hours (which includes most low paid workers) will lose out. A familiar story this year so far.

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