In an effort to address longstanding issues, the government is set to reform the Holidays Act 2003, with proposed changes aimed at simplifying compliance for businesses and improving clarity for workers.

Minister for Workplace Relations and Safety Brooke van Velden announced the plans, highlighting the need for an Act that both businesses can easily implement and workers can readily understand.

“Change has been a long time coming, and I know there are many who are frustrated with the Holidays Act. We need an Act that businesses can implement, and that makes it easy for workers to understand their entitlements. We need to do this once and do it right,” said van Velden.

One significant challenge businesses face is the previous government’s decision to double sick leave entitlements for all eligible workers, which has particularly impacted workplaces relying on part-time staff.

To address this, the exposure draft for consultation will propose pro-rating sick leave based on the hours an employee works.

“Workplaces that rely on part-time workers are particularly vulnerable to unexpected staffing shortages,” van Velden noted.

In addition, the draft legislation will propose a shift from the current entitlement system for annual leave to an accrual system.

“Shifting to an accrual system for annual leave entitlements is just common sense. While workers might not notice any change in their entitlements, from a payroll perspective this should make a huge difference,” van Velden explained.

This change aims to alleviate the complex calculations that frequently trouble payroll software and thereby reduce compliance costs for employers.

The government intends to release the exposure draft of the Bill for targeted consultation in September 2024.

Van Velden emphasised the importance of gathering feedback from a wide range of stakeholders to ensure the new legislation can be effectively implemented across diverse working environments.

“I want to get feedback from stakeholders who will eventually have to work with the Act. We need the Act to be workable for everyone, from the multi-national corporates to the small-town family-run restaurants,” she said.

Particular attention will be given to small businesses, which often operate with varied working arrangements and lack the payroll infrastructure of larger organisations.

“I believe it is important to hear from small businesses in particular, given small businesses will adopt a range of working arrangements and often do not have the same payroll infrastructure as larger organisations,” van Velden stated.

Van Velden’s priority with the proposed changes is to increase certainty and reduce complexity, aiming for legislation that is both sensible and workable.

“My priority with these changes is to increase certainty and reduce complexity. This is about achieving sensible and workable legislation,” she concluded.

The proposed reforms are set to mark a significant step towards resolving issues that have long troubled both employers and employees, with the goal of creating a more straightforward and efficient system for managing holidays and leave entitlements.