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Leave encashment becomes effective next year

Leave encashment- Kate Wilkinson.jpgA new law enabling employees to seek cash in lieu of their annual holiday will become effective from July 2011, if approved by Parliament.

However, the maximum period of encashment would be one week; effectively, the additional period granted to the four-week holiday with pay that came into effect two years ago.

Labour Minister Kate Wilkinson said while the employees can request for encashment of leave, it was up to the employers to accept or insist that the employee concerned actually enjoys the leave period.

The change is a part of the amendments being effected to the Holiday Act 2003, following the recommendations of a Government-appointed group.

The new facility would not interfere with the main purpose of the Holiday Act, namely to entitle an employee to leisure; however, if found beneficial to both the employer and the employee, the former can allow the latter encashment of the exact quantum of a week’s salary; no more, no less.

Ms Wilkinson claimed that the change reflected the desire of employees, “Who were keen to exchange some of their holidays for extra cash.”

“Only employees can make this request and I know from the feedback I have received many will be shoulder-tapping their employers asking for the exchange as soon as they can. But employers would not be able to pressure employees to exchange holidays for cash, though they can decline any request,” she said.

Ms Wilkinson also claimed that the changes were aimed at reducing direct and compliance costs.

Other Changes

Among the other important changes to the Holidays Act is the ability of employees to transfer the observance of a public holiday to another identified working day, with the consent of the employer concerned.

Ms Wilkinson said payment for sick leave, bereavement leave, public holidays and alternative holidays for those with irregular hours and work and pay will be calculated by averaging gross earnings for the preceding 52 weeks or whatever lesser period the employee has been with that employer.

Those applying for sick leave must provide proof of sickness or injury within three consecutive days of such leave if the employer so insists; but the latter would have to pay any ‘reasonable cost’ incurred by the employee in obtaining such proof.

“The maximum penalties for non-compliance with the Holidays Act will double from $5000 to $10,000 if the employer is an individual; and from $10,000 to $20,000 in the case of a company or other body corporate,” Ms Wilkinson said.

Photo : Kate Wilkinson

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