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New Holidays Act – determining an Otherwise Working Day (OWD) for FBAPS leave

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Jason Blockley

Services Director

 

Following our blog on the changes as to when employees can take Bereavement, Sick and Family Violence (FBS) leave, a related issue is the determination of an otherwise working day (OWD) for FBAPS leave which has also caused confusion in the past. The current Act provides the employees are entitled to paid leave if the public holiday, sick day, bereavement leave or family violence leave falls on a day in which they otherwise would have been expected to work. As is true for much of the Act, this is simple for regular workers who, for example, work Monday to Friday every week. Where it becomes difficult is for those employees who are variable and unpredictable.

The “pro rata” approach or prescriptive test

In attempting to solve this problem, the Taskforce considered a “pro rata” approach where the number of public holidays that an employee is entitled to is dependent on the average number of days worked per week. So in this case, a person who works 5 days a week would receive all 11 public holidays, however a person who only works one day per week might only get 3 public holidays. They anticipated a wash-up process at the end of each year to ensure an employee had received their entitlement, and if not, the extra days would be added to their entitlement balance. However they could not reach agreement on this, and the complexity and difficulty in administration was deemed too onerous.

Therefore the concept of an OWD will remain, but the recommendations provide for a prescriptive test to determine whether a day is considered an OWD or not. The test will be whether the employee was expected to work on that day based on a previously agreed pattern such as a roster or an agreement, or if the employee has worked on 50% or more of the corresponding days either in the previous 4 weeks, or the previous 13 weeks.

As for the definition of a week, it is not made clear as to how contention between a previously agreed pattern and a differing actual pattern will be dealt with, and again a “higher of” approach may be needed.

How businesses should manage this right now 

There are clearly a lot of changes coming in this space. The taskforce is attempting to ensure that definitions are clear and clearly quantifiable, but some of the devil in this will truly be in the detail. It is very easy to imagine that definitions such as “agreed hours” and “ an expectation of continuous employment” will quickly become the subject of legal review.

The timing of the new Act is still up in the air. It was originally slated for 2022, but it is difficult seeing that happening now with the country still struggling with the COVID-19 pandemic. In the meantime, employers will still need to remediate workers for historical underpayments and MBIE are continuing their audits and investigations. So for a cost-effective and efficient way to do this, see our Holidays Act Remediation Engine (HARE) solution.

In our next blog we will unpack how annual and FBAP leave payment calculations are foreseen in the new Act, with the surprising inclusion of more complexity rather than less.

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