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Impact of Increased Employee Holiday Leave on Employers in New Zealand

March 22, 2012 | Comments: 0 | Views: 187

As an employer you will be aware that in New Zealand on 1 April 2007 the Holidays Act 2003 increased an employee statutory minimum paid annual holiday entitlement from three to four weeks. However, there has been a line of cases which have explored the question as to whether a contractual term in an employment agreement increased an employee's holiday leave entitlement from four to five weeks.

So far the cases that have looked at this issue have been in the context of a collective employment agreement. However, many individual employment agreements adopt verbatim the terms and conditions of either historic union agreements or more recent ones. Consequently, employers should review their annual leave and long service leave terms and conditions to ascertain what annual holiday entitlement is actually being offered.The key issue in each of the additional leave cases is whether the leave clause limited the employee's holiday entitlement to the four weeks provided by the NZ Holiday Act 2003 or whether it entitled the employee to an additional week that is five weeks of paid annual holiday. The parties can also agree to enhanced or additional entitlements separate from the Act.

In Cerebos introductory notes to the leave clause a recent test case referred to leave being 'in accordance with prevailing legislation'. The annual holiday clause set out the employee's entitlement as three weeks which was the minimum before 1 April 2007. However, there was another clause which entitled those employees with more than six years' service to an additional week of annual holiday, the additional leave clause.

The question for the Court of Appeal was whether the additional leave clause stopped being an enhanced or additional entitlement on 1 April 2007 and was, instead, absorbed within and became part of the four week annual holidays provided by the NZ Holidays Act 2003.

The opinion of the Court of Appeal was that the parties intended that the employment agreement complied both with existing and future legislation and that the additional leave clause addressed a separate right. This separate right entitled employees who had completed six years current continuous service to an additional week of annual holiday. The Court also stated that the parties could only have intended the additional leave clause to mean additional to the minimum entitlement provided by legislation. Basically, the additional leave clause was designed to reward longer serving employees for long service and this right was not subsumed or absorbed within the NZ Holidays Act 2003 statutory minimum.

The lesson to be learned from these cases is a universal one - that attention needs to be given to the wording of each clause in every employment agreement and its interaction with other clauses.

Michelle is an employment law consultant at Fortune Manning Lawyers based in Auckland, New Zealand. Fortune Manning is a long-standing Auckland lawyers firm. Their recent wins at the NZ Law Awards confirm that they are a firm well recognised by their clients and peers for providing exceptional service. Fortune Manning is described as a full service legal firm. This means they can provide you with a broad range of legal services spanning your most necessary requirements. Our clients range from small to medium businesses through to multi-nationals, from individuals through to charity organisations.

Source: EzineArticles
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