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23-09-2021

Changes to sick leave entitlements: what you need to know.

In May 2021, the Government passed a bill to double employees’ minimum sick leave entitlements from five to 10 days. The changes are now in play and as always, we’ve covered these changes for you.
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Four key things you need to know.

  1. From 24 July 2021, minimum sick leave entitlements increased from 5 to 10 days. 
  2. The changes will roll out gradually, with employees gaining the extra five days when they reach their next entitlement day. This will either be after 6 months of employment or on their sick leave anniversary (12 months after they were last entitled to sick leave). 
  3. If your business already gives your employees 10 or more sick days per year, we recommend checking your sick leave policies and employee agreements to see if any changes need to be made. It’s always a good idea to seek some advice if you’re not sure about anything, we would suggest contacting MBIE in the first instance. 
  4. The maximum amount of unused sick leave that an employee is entitled to remains at 20 days in any year, under the Act.

Let's go through some employee scenarios.

 

Scenario 1

Simon started work at Accounting4ULimited  on 15 January 2021. He becomes entitled to sick leave six months later, on 15 July 2021. Because the sick leave changes don't come into force until 24 July 2021, Simon is only entitled to received 5 days of sick leave. On his next sick leave entitlement anniversary, 15 July 2022, he will receive 10 day sick leave.

 

Scenario 2

Anna has been employed by Accounting4ULimited since  2 March 2020. Her sick leave entitlement anniversary is 2 September each year. On 2 September 2021, she will receive 10 days sick leave.

If you’re a Smartly customer, we’ll sort everything for you in the background. Regardless of whether you’ve got new employees starting, or existing employees nearing their employment anniversary, the software will automatically update, so your team are receiving their correct entitlements.

What’s driven the change?

 

In October last year as part of their election campaign, the Labour Party announced they would double minimum sick leave entitlements if re-elected. The issue with the current minimum entitlements came to light after the COVID-19 pandemic, where Kiwis were urged to stay home if they weren’t feeling well. Increasing employee’s sick leave entitlements will mean more people have the capacity to stay home if they are sick and provide more support and flexibility for working parents. 

More sick leave changes are expected in early 2022.

 

The Government has started working to implement the recommendations of the Holidays Act Taskforce. One of the recommendations includes giving employees access to some of their sick leave from day one of employment, instead of waiting till they’ve worked for the business for six months. The Government expects to introduce this legislation in early 2022.

Not a Smartly customer? Switch today. 

 

Payroll legislation, the Holidays Act, sick leave entitlements and more, it’s a lot to get your head around. Our automated and simple to use payroll software can sort this all for you. Sign up today simply by getting in touch with one of our experts!

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