Increased sick leave gets the green light: what this means for employers

Friday 21 May 2021

Authors: Rosemary Wooders, Charlotte Joy and Harriet Wolk

The Government has delivered on its election promise to increase the minimum employee sick leave entitlement from five days to 10 days each year.

The Holidays (Increasing Sick Leave) Amendment Bill received Royal Assent on 24 May 2021. Employers have two months to prepare before the changes come into force on 24 July 2021.

While this legislative change was initiated as a result of the COVID-19 pandemic, the Government has emphasised that it will continue to support employers with other leave schemes (e.g. COVID-19 Leave Support Scheme and COVID-19 Short-Term Absence Payments). The Government's goal is to ensure that employees have adequate sick leave (particularly in light of how long some employees had to take off if they contracted COVID-19).

Change to sick leave entitlem​​ent

An employee will become entitled to 10 days' paid sick leave after six months' continuous employment and a further 10 days' paid sick leave for each subsequent completed 12 months' continuous service.

For existing employees, the entitlement arises when they next become entitled to sick leave for a 12-month period. The legislation continues to provide that an employee may carry over up to 10 days' sick leave and the current maximum days' sick leave which can be accrued from year to year remains 20 days.

An employer can still offer employees enhanced paid sick leave over and above the statutory minimum, including allowing an employee to carry over an enhanced or additional benefit, on a discretionary basis or as an additional contractual benefit.

Considerations for emp​loyers

Employers will have approximately two month​​​s to prepare for this legislative change. In advance of this change coming into effect, we recommend employers consider the following:

  • How should we communicate with employees? We recommend that employers inform all employees of the increased sick leave entitlement.

  • Are our payroll systems ready for the change? Ensure payroll systems are updated to account for the increased entitlement.

  • Have we updated our employment agreements? As a matter of best practice, employment agreements which currently refer to the statutory minimum sick leave entitlement should be updated to reflect the increased entitlement. However, if employers do not update their employment agreements, the increased entitlement still applies as a matter of law.

  • Do we offer enhanced entitlements? Many employers already offer 10 days' sick leave, as an enhanced contractual benefit. These employers may wish to consider whether they continue to offer enhanced sick leave entitlements over and above the statutory minimum, noting that there is no legal obligation to do so.

  • Do we need to update our policies? Any policies which expressly refer to the statutory minimum sick leave entitlement will need to be amended.​

If you have any questions about the matters raised in this article please get in touch with the contacts listed or your usual Bell Gully advi​ser.​​


Disclaimer

This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Liz Coats

    Partner Auckland
  • Rachael Brown

    Partner Wellington
  • Tim Clarke

    Partner Auckland
  • Rosemary Wooders

    Senior Associate Auckland
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