The government warned that companies could ‘play with the system’ if sick leave doubled

Officials have warned that government employers may try to “play with the system” to avoid doubling their workers’ sick leave.

Advice from the Ministry of Business, Innovation and Employment on the proposed new law said that employers could do this if they don’t hire new staff, reduce part-time hours, or discriminate against hiring employees who are likely to use more, such as parents.

But Labor Relations Minister Michael Wood said he had “no high expectations” that companies would not respect the increase, which is expected to cost companies nearly $ 1 billion a year.

“Whenever you have a system like this, it is possible that some people on both sides will try to bend the rules, but I have general confidence in New Zealand employers and employees,” Wood said.

On Tuesday, the bill to double the statutory minimum sick leave rights from five to ten days was introduced in Parliament. It is likely to be approved in mid-2021 and then it will take two months to go into effect.

The Ministry of Business, Innovation and Employment advice to Wood on the policy, which was one of Labor’s electoral promises, estimated that the change would cost companies nearly a billion dollars a year.

The option he presented to the government was to also increase the legal maximum number of “transferred” sick days that staff can carry over to 25 instead of 20 the following year.

This is supported by the E Tū Union but was not picked up by Wood, who said he opted for the “simpler” option, but the maximum renewal could be discussed at the select committee stage.

The MBIE board said that about half of employers gave their staff only the legal minimum of five days and the average rate of absence among all employees was 4.7 days per year, so many Kiwis exhausted their leave every year.

Those most likely to receive only the minimum of five days a year are women, Maori, caregivers and young people.

Especially in the manufacturing, construction and accommodation and food service sectors, where employees “generally had minimum labor standards”.

Wellington cleaner Malia Motusaga only gets five days of sick leave a year and said it “always” runs out.

“I use it all when the kids get sick, so there’s nothing for me. When I get sick, I go on unpaid leave. I would really appreciate those extra five days.”

The law change is expected to cost companies around $ 958 million per year, a 0.88 percent increase in the country’s wage bill.

But officials noted that this figure did not include the potential financial benefits as a result of healthier workplaces, decreased absenteeism and improved productivity.

MBIE officials cautioned that small and medium-sized businesses (SMBs) could feel the pressure of rising costs more than larger organizations because their smaller payroll could mean they have less ability to manage more stay-at-home employees.

“For example, a small employer may need to hire someone to cover a sick employee, while a larger employer may manage an absence within its current workforce.”

MBIE officials did not believe that 10 days of sick leave per year would require a change in the funding model where the government covered the costs of longer leave periods.

Businesses could respond to rising labor costs by cutting their profits, passing the cost on to consumers, cutting hours, cutting other benefits, hiring fewer employees, or discriminating against people who are likely to take more sick days like parents. .

“While there are ways to guard against discrimination, or to monitor non-compliance with labor law, it is not possible to assess to what extent this could occur,” the council said.

National labor relations spokesman Scott Simpson said the government was using Covid-19 as an excuse to introduce the law change and that it would increase costs for companies.

“Doubling sick leave just adds up to more costs for businesses at a time when they can least afford it, in addition to the increases in the minimum wage and the proposed additional holiday.”

Auckland Chamber of Business Executive Director Michael Barnett supported the law change, saying it is about “doing the right thing for the workplace.”