Holidays (Increasing Sick Leave) Amendment Bill

That’s very decent of you, Mr Chair. As I was outlining to the committee, in a perfect world there would be no restrictions on sick leave and everybody would be able to take whatever leave they felt they needed. In the real world, where you have a couple of hundred thousand small businesses operating in this country, surviving in a tough trading environment day to day, there do need to be rules and restrictions. So, for a very long time, we’ve had five days of sick leave. On average, across the country, the average take-up of that sick leave is 4.7 days. So the experience is that employees do use the sick leave fully. There are some, not all, who see it as, essentially, an entitlement, as part of their business arrangements, or their employee arrangements.

Now, this bill doubles that to 10 days. So there’s no magic or there’s no money tree or anything like that. What will happen is that there is a very likely outcome that more sick leave will be taken, and it may well be that people will expand to take the full entitlement of 10 days—who knows? There’s been no evidence put forward, and maybe if the Minister knows of any detailed research that’s been done by his officials estimating the likely outcome of this, I’d be very interested to hear from him on that.

I’d be interested to know what the Minister thinks will be the consequences for those small-business owners for this extra cost imposed, and in combination with higher minimum wage costs and so forth, what impact that will have on the ability of some businesses to stay in business, and whether or not we’re going to make it more difficult for those little companies, those family companies, to survive. I was at a celebration—well, a fund-raiser, actually—on Sunday night with the Indian community and there was real anger amongst people there, small-business owners, primarily, about the way that this Government keeps on adding substantial costs to those businesses without, apparently, any thought of how that is going to be paid and how the businesses are to stay in business—white hot anger to the Government. So a related question I have to the Minister is: what does he say to those small business operators, who are the backbone of our economy, and, ultimately, the employers?

Now, it may well be that some companies will be able to pass on the costs, and so it will be consumers that ultimately pay. But there are, of course, many, many industries where those costs can’t, effectively, be paid on, and if you think of the simple cafe, if it does become too expensive to buy a coffee, then people always have the choice not to buy the coffee. So they’re discretionary businesses and they fold up if it all becomes too expensive.

So the question that we have is around timing, given that at a time when the economy does continue to struggle, and we hear how wonderful things are—well, the economy is struggling and many businesses are struggling. Is this the time to be doing it? Then when it comes to any trade-off in terms of productivity, where is that? What research is being done to indicate that if you have fewer days worked, there will somehow be a quid pro quo and higher productivity levels because of it?

The other issue that came up during the select committee process that I’d be interested to hear from the Minister about is the decision not to pro-rata the entitlement. So if you happen to be like a woman I was talking to a couple of weeks ago who owns a bookshop and employs a number of people who work one day a week—so they, effectively, work 50 days a year. Now, it’s quite possible that in theory they could take 10 days of sick leave out of those 50 days a year, if they were to take their full entitlement, as well as the holiday leave. And this Government’s added an extra public holiday. So if it happened to fall on that day, if they were working Fridays or Mondays, one day a week, then it is very significant. The Government refused to consider making this entitlement pro-rata as well. So I’d be interested to know what his thinking was behind that. Thank you very much.

Thank you, Madam Chair. I’m keen to take a short call in the committee stage of the Holidays (Increasing Sick Leave) Amendment Bill, which is not one of the larger bills that this House has seen. In fact, it’s a very simple piece of legislation that extends the minimum sick leave entitlement from five days to 10 days, and recognises, I think, after coming through a pandemic, all of the adjustments that the Government has had to make to support businesses and staff to be able to ensure that people can stay home when they’re sick. This bill feels timely, at the very best, and, ideally, this would have happened 10 years ago, I would say. We hear continually from working people, particularly those with caregiving responsibilities or public-facing jobs where they’re in contact with a lot of other people, that if people have only the minimum entitlements, quite often, actually, they are turning up to work sick because they can’t afford to take unpaid time off work, and that, actually, parents and caregivers are leaving employment to be able to manage sickness of others in the family.

When we hear from the Opposition their concern around the impact of this on employers, I would again say that losing good staff because they’re not able to care for their families or their own health is a greater cost than an additional five days a year maximum, for that minimum of sick leave, and that we have a problem with presenteeism, which is people turning up to work sick and actually being compromised in their work and not being as productive as they could be. We all know that feeling, in this House, of turning up when we’re actually sick and struggling to make decisions and get our words out. In some workplaces, that’s actually a risky thing, not just the transmission of disease to others but also impaired decision making puts your colleagues and yourself at risk. So this is an incredibly important conversation for us as a country, and the Greens are very pleased to be seeing this.

We would have liked to have seen the transitional arrangements in the legislation—bringing this in over time that means that some workers won’t get access to this increase for, like, over a year away, and we’re a bit disappointed in that, because there is such an urgent need, and people that have been talking to me are expecting it, because they desperately need it for managing their health and their family.

We’ve also put up a couple of Supplementary Order Papers (SOPs) responding to submissions that we heard through the select committee phase, around people talking about how difficult it is with the many employers—and we heard this reflected in submissions from some employers—assuming that people are ripping the system off and making an assumption that they’re doing that and requiring them to get a medical certificate to prove that they’ve been sick. And, actually, it’s quite difficult to get into a lot of doctors’ surgeries. I was talking to a family member recently who was saying it was a month before she was going to be able to get in to see her doctor. So we’re putting additional pressure on our health system for no benefit. And so our SOP is to return our law to the state it was pre-2010, that would enable employers to request a medical certificate if they have reasonable grounds to believe the person or their family members were not sick. So it’s, actually, to me, about restoring good employment relationships. It doesn’t create a good workplace environment if you are assuming that your entire team is seeking to rip you off. That’s a really negative employment relationship. Being able to have honest conversations with people when you’ve got reasons to have concerns is how we actually resolve problems that can work out for both parties.

So we’ve got this SOP in place, also to ensure that we don’t reduce the amount of accrued leave that people are able to gain, which is in the legislation at the moment—it would keep it at the status quo and not get the benefit of the increase to 10 days, so I hope there will be support for those amendments.

Can I just offer a few comments in response to the members who have spoken to date, Mr Woodhouse and Ms Logie—

💬 Hon Michael Woodhouse: No, it was Mr Goldsmith.

Mr Goldsmith, sorry—I didn’t mean to imply that all National Party members are the same, by any stretch, and didn’t mean to cause offence to either of the members. But if I can respond to Mr Goldsmith and Ms Logie, Mr Goldsmith raised a series of concerns, some of which related to the bill and some of which were more general in nature, but they focused on the question of the costs that might accrue to employers as a result of an increased sick leave entitlement. This has been one of the main topics of debate over the course of this legislation.

The first thing that I would say is that any minimum statutory entitlement in terms of employment rights by definition probably does create some costs. If we had the view that that was inappropriate, we wouldn’t have a minimum wage, we wouldn’t have any minimum statutory sick leave or holiday leave entitlement. I don’t think that many or any members of the House hold the view that that would be satisfactory, so it’s a case of trying to balance up the public good and work out what is appropriate in terms of a minimum entitlement that should apply in these situations. Just the evidence, for me, over the course of the past year has been so clear that there is such a value for workers, for workplaces, and for society at large for there to be an adequate sick leave entitlement in place that I do believe that the balance of 10 days’ sick leave per year is a justified one. We have seen the evidence over the past year of the risks that are posed not just to the person themselves but to others if people do come into workplaces when they are unwell and spread sickness. That has a significant impact on the wellbeing of the person themselves because they are not recovering, and it has a significant impact on the workplace more broadly because other people become sick.

I note this point: at the moment, we are in the process of going through the Estimates of Appropriations, and the Opposition have asked a range of questions of Government agencies as part of the normal course of events. One of the very interesting questions that pops up across those is the number of sick leave days that have been taken at various Government agencies year on year. The number has actually dived significantly over the last year—no doubt in part because of some of the lockdown periods, but I think it has also been down to the fact that people have been more encouraged this year to look after themselves, to stay at home when they are sick, so they have not been spreading illness into the workplace more generally, which affects other people and, obviously, has a productivity impact on the workforce more generally.

Over the course of this debate in the House, I have quoted American studies which show a 20 percent productivity decrease if workers do, for one reason or another, come into the workplace when they are unwell, and that is because illness does spread in the workplace. I also note that the work that has been done with the Ministry of Business, Innovation and Employment in preparation for this bill identifies that around about 50 percent of workplaces already have an entitlement of 10 days’ or more sick leave per year, so this is not something completely out of the box. It is not something that is completely unreasonable. It is creating a minimum entitlement that, actually, many New Zealand workers do already have available to them.

Further to that, I note that the people who currently miss out the most tend to be people in relatively vulnerable employment situations. So we have a situation in which a large number of workers—probably those in professional roles, probably those with the benefit of collective agreements—have 10 days of sick leave or more, and it’s those workers in more vulnerable positions who don’t. I note that within that, the workers who are worst affected by the relatively low provision of five days at the moment are those who have dependants, because under New Zealand’s sick leave requirements, people need to use their sick leave in most cases, unless they have a separate entitlement in their agreements, for care of their dependants as well. So it’ll be those mums and dads who have significant requirements in terms of looking after their kids—and we all know how many bugs kids pick up in the workplace—who are disadvantaged by the five days at the moment.

So, taken as a whole, I think the justification for 10 days is strong in terms of the health and wellbeing benefits for the individual, in terms of productivity at the workplace level, and in terms of reducing risks across our society of the spread of illnesses. It’s also justified on the grounds that we want to have an equitable playing field for people in the workplace. I note as well that there are a significant range of supports that the Government has been offering to small businesses to ensure that they do get through the current challenging periods.

Turning to Ms Logie’s comments, I note her support for this piece of legislation and thank her for her advocacy for it over the passage of the bill so far through the House. She does note the position of the Green Party in respect of the transitional provisions in clause 6, where Ms Logie and the Green Party have advocated for transitional provisions that will, effectively, allow people to gain the additional benefit of 10 days’ minimum sick leave per year more quickly than they do under the provisions of the bill. That is something that we have tried to carefully balance up in the bill. We do want New Zealand workers to have the facility of 10 days, for all of the reasons that I have outlined, but we also do want it to be done in a way that is manageable for employers and manageable for payroll systems. For those reasons, we have settled on the provisions of clause 2, giving a two-month commencement date, and clause 6, which allows for the additional days of sick leave to come into effect, effectively, when a worker gets to either the six-month point after employment, when sick leave provisions kick in, and thereafter on the anniversary date of that date each year. So I do understand the reasons why Ms Logie has argued for those provisions to come into place more quickly, but we have tried to strike a balance here, and that’s why we’ve landed where we have in respect of clauses 2 and 6.

Thank you, Madam Chair. I’d like to thank the Minister for his comments because they go to some of the broader issues that we on this side of the House are concerned about in terms of this legislation. I want to pick up on a couple of things that the Minister has said and pose some questions, which I suspect he will take an opportunity to answer in the course of this debate.

The Minister mentioned that his driving rationale for pushing through this legislation at this time was twofold. Firstly, it’s in response to the COVID situation where the world has been thrust into an incredibly unusual health and also business and economic situation, and New Zealand businesses, like those around the rest of the world, have struggled in some cases to come to terms with the situation that has confronted them. But to use the cover of COVID as, essentially, an excuse and a methodology for bringing in what I suspect has been long-time Labour Party policy, driven from trades hall—that an extension of paid sick leave should come through in a legislative framework—I think, in some ways, is to devalue the seriousness of the COVID situation.

The Minister made the point that those employees who have dependants are likely to be the big beneficiaries of this legislation. As a parent myself, I can well recall having to take the occasional day of sick leave when my own children were not well, but that obligation falls disproportionately on employers who employ people with dependants. The perverse net outcome of this piece of legislation is likely to be that in a candidate interview scenario where a new job is being created or a job being is being filled, and there are, let’s say, two candidates with equal skill and ability and background and competency but one of those candidates has no children and one candidate has a number of children—I put it to the Minister that in many cases it will never be stated by the employer, but the employer is going to be thinking, “What is the risk to my business of taking on the candidate who has a number of children?” Because, effectively, what this piece of legislation is doing is asking employers to underwrite the good health of their employees’ dependent children. I don’t think that’s a good basis for making legislation, and I don’t think it’s a good basis for encouraging job creation. I don’t think it’s a good basis for encouraging economic growth. I think it will have, actually, the perverse opposite impact of what the Minister is looking for.

I want to talk—and maybe I will do so in a later call, Madam Chair—but when the bill was introduced, the Minister actually asked the select committee to consider a range of items. Members will remember that the bill was introduced under urgency, with a truncated select committee process where select committee submissions were sought over the summer break. The Minister then asked the committee to look at a whole range of things. So submitters put thought and consideration into those matters, and then subsequently the Minister has accepted the recommendations in relation to the Holidays Act per se. So some of those things that were considered by submitters and also by the select committee are now almost of no value, except, I guess, if further legislation comes into the House at some future point in time. So that was a bit of a waste of the committee’s time, it was a bit of a waste of submitters’ time, and I don’t think it helped focus submitters’ or the committee’s thinking on what the real impacts of this legislation would be. One of them is about the prorating, or the lack of ability to pro-rata, sick leave entitlements to those people who are part-time employees. So there’s a Supplementary Order Paper in my name, and I will take a call further on in this debate to go through the pros and cons of that.

Thank you, Madam Chair. It’s a pleasure to stand and take a call as a business owner and employer who currently allows staff more than five days’ sick leave currently. It’s a real pleasure to take a call on this piece of legislation here in the committee stage.

We’ve heard from members opposite—Mr Goldsmith and Mr Simpson—about the timing of this piece of legislation and that we’re using COVID as some kind of an excuse to push some weird agenda that they think may have been going on here for some time. But, actually, I say that what we’ve seen with COVID has shown us just how important this change is and how much this change is needed.

Actually, the timing of this legislation, I believe, couldn’t be more perfect, because what we don’t want is people who are ill coming to work because they don’t have the ability to take paid sick leave, because they do need to keep their income coming in. We don’t want them to come to the workplace while they are ill, passing on whatever illness it may be, because, let’s face it, some people work in very close proximity to clients and customers that come into the workplace, so there is an extremely high risk of passing on whatever it is that they may have. So I say that this is the perfect time to bring in this legislation in order to allow people who are unwell to take the time to be at home, to get well, before coming back to the workplace.

We’ve heard from members opposite that when people have more sick leave, it will cost the company more. And, yes, to a certain degree, it will cost more, but I would also counter-argue that if we have people coming into the workplace sick, passing on their illness, then we will have more and more and more staff members having to take time off because they are ill.

Mr Simpson mentioned that as a business owner, if a person is faced with a prospective employee who has no children and one who has children, they would choose, potentially, the person that doesn’t have children. Well, I say that I can’t fathom that, because it assumes that employers don’t take into consideration, potentially, the type of person and the fit that they would be for their business over the fact that they have children and they might take more sick leave. I find that unfathomable.

I did want to ask the Minister earlier on a question around incrementally introducing the 10 days’ sick leave and whether that would really help the transition for business. The Minister did answer that, but there was another question I wanted to bring up with the Minister, and others have mentioned it. They’ve been talking about the prorating in terms of people that work part time. We hear this argument from members opposite that if someone works part time, they’re essentially going to get a whole lot—a whole lot—more sick leave than anyone or someone that works full time.

I would like to ask the Minister the question: if there is somebody that works part time, it is correct, is it not, that they would be entitled to sick leave for the days that they would ordinarily work and need to take off as sick leave? So they’re not taking additional days to what they would ordinarily work; they would simply be given sick leave to cover the days that they would ordinarily work. So that’s a question that I have there for the Minister. I think that I will leave that at that. Thank you.

Thank you, Madam Chair. Just starting up where the last speaker, Jo Luxton, finished off, the advice that the Education and Workforce Committee was provided right back at the start made it clear that there were potential problems around employers discriminating against potential employees who have childcare responsibilities that could result in greater use of sick leave. This isn’t something that we made up; this was advice that was given to the committee at the beginning, and something that we wanted to flesh out, and something that I don’t think, during the course of this bill so far, has actually been properly discussed, because all we get from the other side—and maybe again today—is, “Oh, well, how could this possibly be a problem? I can’t fathom it.” Well, it’s actually in the advice that we got, and so we take that very seriously and we’re entitled to ask the questions: has that been considered, what evidence is there to suggest that it won’t happen, and what considerations has the Minister taken into account? So that was why we’re going there. It’s not something we made up just to antagonise members opposite. It’s something that was in here and that we do take seriously.

What I want to ask Minister Wood about specifically is the claims around productivity gains, because we heard a lot in first reading speeches from the Minister and others about the increase in productivity to businesses, and we posed the question: well, if it was so great for productivity, why don’t businesses already do it? Some big, big businesses do that can afford it, but the very small ones don’t do that, for the most part, and if it did lead to such a great gain in productivity that would make up for the costs of having 10 days’ sick leave, then I guess the question is: why don’t businesses already do it?

I think the answer to that lies in the fact that there is actually no evidence that we were supplied—and it is in the committee report that we did ask for some reports that were mentioned in relation to Australia’s minimum sick leave requirement and how that’s increased their productivity; that was never supplied. A lot of the advice and a lot of the speeches that we’ve heard talk about anecdotes and stories that they’ve heard, but actually I want to ask the Minister a specific question: what reports or evidence has he relied on that he can point us to, that we can go and look at, that show a substantial increase in productivity that would offset the costs of the extra sick leave? So that’s somewhere I wanted to go today, to ask him about that. I’ve got a few more questions, but I’ll let the Minister answer that one first, and then perhaps we can carry on.

I thank the various members for their questions and discussion on a range of points. I’ll start with Ms Luxton’s discussion about her experience as a small-business owner and some of the benefits of providing appropriate sick leave for her employees. She asked a very specific question of me, which is that if someone works part time, is it correct that sick leave will only apply on the days that they ordinarily work? The answer to that is yes. This is quite an important point in respect of the prorating argument that we’ve had a little bit of dialogue around so far. Because the reality is that a part-time worker only works on a certain number of days per week, and so the incidence of sick leave that they will need to call upon is going to be less than the incidence of sick leave that a full-time worker will need to call upon. Because, on average, that person, when they become sick, will become sick on days that they are ordinarily working less than the number of days that a full-time worker becomes sick on a day that they are ordinarily working. So I do think it’s just simple maths that some of the rhetoric that we have heard about a blowout in sick leave from part-time employees, that every part-time employee is going to rack up the full entitlement, simply isn’t borne out—either by the maths or the facts.

I do have to take issue with Mr Simpson’s characterisation of small-business owners as apparently being widely willing to discriminate against people who have children. I think that is an unfair characterisation of the way that most small-business owners approach their employment relationships, around their ethics, quite frankly, and around their willingness to engage legally in employment relationships, because that would be an entirely illegal approach to take.

I also put it to Mr Simpson that if that was the case, we’d see it now. Because we don’t have a prorating arrangement for sick leave entitlement as things stand, either under the statutory minimum or under most entitlements in employment agreements that I have seen, where people get a higher than statutory minimum entitlement. So if there was going to be widespread abuse, if people were not going to be hired—because they had dependants—for that reason, we would see it happening now, and there is absolutely no evidence of that. I certainly do not expect that many—or any—small-business owners would behave in that way, and I suspect some will be offended by the suggestion that they would.

I do also want to take issue—sorry, there was one other point, just on the prorating issue. No, I’ll come back to that later. I’ll touch on the other point raised by Mr Simpson, which is that COVID has in some way been used as an excuse for this piece of legislation, and again I certainly wouldn’t characterise it in that way. COVID has been a very revealing period for New Zealand, and I think that any Government would be foolish if it didn’t try and draw some lessons from the experience of a global pandemic: the strengths in our society that it highlights, but also some of the weaknesses and some of the things that we need to improve. For our Government, the experience of a global pandemic has brought to the fore the question of workers having adequate sick leave so that their health is taken care of when they simply need to stay at home to get better, and also the value of that in terms of not passing on bugs to others in the workplace.

Here I want to come on to one of Ms Stanford’s points, which was an obsessive focus on what’s the productivity argument here. Well, I’ll come to that in a moment—productivity is important, but productivity is not the only reason why we have minimum entitlements in place for people in the workplace. We have minimum entitlements, such as decent sick leave and good holiday leave and the minimum wage, in the workplace because it’s about how we want to treat people. When it comes to sick leave, we want to ensure that when Kiwi workers are unwell they have a reasonable opportunity to stay at home and get better. I believe that it’s very clear that that will support productivity, because workers who come into the workplace and are unwell are unlikely to perform at the level that an employer would wish them to, and they are very likely to pass that on to others in the workplace.

In the second reading debate, I did refer to a relatively substantial United States study—which I am happy to get the details of for Ms Stanford—which did show a 20 percent impact on productivity from workers coming in when they were unwell. But, at its core, we want workers to stay at home not just for the productivity gains but so that their health and their wellbeing can be looked after. It also stands to reason that a worker who is able to take sick leave to stay at home and get better will recover more quickly, and therefore, when they do return to the workplace, are more likely to be back at peak performance in terms of the duties that they undertake.

I think those are probably most of the key questions that have been raised by members to date, and I’m happy to answer any further that come up.

Thank you, Madam Chair. It’s a privilege and a pleasure to take a call in the committee stage of this important debate. I just want to begin by responding to some of the comments raised from the other side around dependants, because I feel like I took a step back about 60 years into the 1960s around those comments, and I wasn’t even born in the 1960s but I’ve heard enough about that time to know that it felt like I was going way back in time. Because it kind of felt and it kind of sounded like employers wouldn’t hire women, and I know that wasn’t stated explicitly but it was certainly implied in the debate. And actually, what I want to talk about is the number of men I’ve worked with over the years who have campaigned to increase the sick leave for them in their workplaces. In one of my previous roles, I worked as a union organiser, proudly.

💬 Hon Scott Simpson: Ah!

I know, I know Mr Simpson. I know it’s hard to hear that there’s people here who understand working people—over here. Look at us over here. And so—

💬 Hon Scott Simpson: The great aspiration.

Absolutely, and these men were very aspirational for their families. In particular, they always were lobbying for increased sick leave in their workplace. And one of the arguments they would use around that was actually about caring for dependent children—and these were sawmills, male-dominated industries, and the men, when we were doing our collective bargaining, would always put a claim up to significantly increase their sick leave because they would tell me that when their children were sick, often their wives—if they were married to a woman—would have used up their sick leave, their five days of sick leave, to look after sick children, and that it would then fall to them. So actually, I want to counter the implied argument from the other side that somehow it’s people of a certain age or women who are the ones that actually take care of their children when they’re sick. And I know that the Minister in the Chamber tonight is actually one of those fathers that has modelled that and so understands exactly what I’m talking about.

I want to particularly talk about supermarkets, because in the second reading debate there were comments made around supermarkets being unable to afford this. I used some time in that debate to talk about my experience working alongside supermarket workers. The first thing to note is that Countdown already have eight days of sick leave, and they already accumulate more than the 20 days alongside other benefits. So for a large Australian-owned company like Countdown, it will not be much of a stretch to move from eight days to 10 days a year. The other main supermarket chain we have in New Zealand is Foodstuffs that owns our Pak ’N Save and New World supermarkets, and the majority of those supermarkets do not have a collective agreement in place and only pay the minimum of five days a year.

💬 Hon Michael Woodhouse: What a lazy union that must be.

These supermarkets are owned by multimillionaires, Mr Woodhouse, and they can afford to pay 10 days a year. They certainly can. And so—

💬 Hon Michael Woodhouse: Sounds like the trades hall.

Isn’t it a great thing? Trades halls are great places. So look, the point is is that for those employers, they can and they should be paying more. And as many commentators have pointed out today, it’s actually critical for the community, for the customers of those places. How would you feel going into a supermarket knowing that there was somebody there who should have stayed at home but did not have enough sick leave and actually was pressured and felt obligated to go to work and then they’re serving you food across the counter?

That’s the risk that we take, because if workers don’t have access to sick leave, they will either use annual leave, which is a bad thing to do because annual leave should be used for proper rest and relaxation; they’ll take leave without pay, which will impact on their ability to pay the rent or the mortgage; or they’ll go to work, and when they do that, they put their own health and safety at risk, they put the health and safety of their colleagues at risk, and their customers. But workers are often placed in these incredibly difficult situations. So increasing sick leave for these workers, I’ll just finish up by reminding everyone, will have a positive impact on the wellbeing of workers and the wellbeing of our community, and it’s the right thing to do. So thank you, Madam Chair.

Thank you very much, Madam Chair, for the opportunity to speak to the Holidays (Increasing Sick Leave) Amendment Bill. I’ve got a number of points and, in many cases, associated questions for the Minister. So I’ll just get right into it with a query around the number that’s involved. So an increase from five to 10 is being contemplated, but I wonder if there was consideration given to any other number—any other number greater than five, presumably, to be consistent with the Minister’s intention with the Act. Was it contemplated, for example, that—in fact, looking at the regulatory impact statement, I understand there’s a sort of strangely specific example in the negative. They’ve said that eight or 15 days per year were not contemplated. But I wonder if there was any particular rationale for the calculation of 10, other than it’s just a nice round number, I suppose, and double the current one.

Also, actually, more fundamentally, taking into consideration and taking in good faith—although the argument’s sort of been advanced in favour of the bill—do these arguments not also apply to a scenario of unlimited sick leave? If productivity increases the more that a person is able not to be present when they are sick, then is there any good rationale for drawing the line at 10, as opposed to any other number or, indeed, any number other than, say, 365 days per year?

Just to be clear, for the sake of the record, I’m not advocating that there be an unlimited amount.

💬 Marja Lubeck: Sounds like it.

Indeed, on this side of the committee, we are pretty clear, I think, to most people who are listening and paying attention, Ms Lubeck, that, in fact, we’re not arguing for any change in the status quo at all. But in terms of the Minister’s rationale, why should there be a limit at all and why should it not be the case that an employee, or worker, I suppose, in general—I should check the language of the Act, but, in any case, I’d love an explanation as to where (a) the line should be drawn at 10 as opposed to any other place, or (b) be drawn at all. So that’s the first point and associated question.

The second is, I wonder if the Minister can advise me and, not having been particularly involved at previous parts of the passage of the legislation—it’s a genuine question and I don’t know the answer; it might have been contemplated. I wonder if there was a scenario where the Minister has considered a half-way house whereby a person might be well enough to work, in their own right, but presenting to a physical workplace would represent a risk to their colleagues. That spectre has been raised by the Minister and others in proposing the bill. But I wonder if there will be a more nuanced approach, particularly in the light of COVID-19, which, again, has been referenced quite extensively across the committee, whereby there might be a scenario where a person is willing and able, indeed actively would rather not—excuse me, I’m confusing myself here, Minister and Madam Chair. I’m thinking of a scenario where a person is willing and able to work and would actively rather not have time off—and, believe it or not, those situations do arise. It can be difficult and stressful not to turn up to work and to have deadlines missed or obligations to third parties not fulfilled and so on. Is there a scenario in which a person, under this proposed legislation, might be able to be absent from work, work from home, but not be taking sick leave as such? I don’t know if that’s in the scope of the bill, so a genuine question there as to whether that was part of the Minister’s consideration in putting forward this proposed law change.

Finally, just really more of a comment in terms of the way that the debate has sort of played out so far. I wonder if members opposite might acknowledge that given some employers do already offer 10 working days—10 days of sick leave, rather; non-working days, I suppose. Given that that’s already in some cases in place already, might it be the case that employers who are able to afford to do so are already doing so? I don’t think we should think the worst and expect the worst and assume the worst of employers any more than we should assume the worst of employees when it comes to these matters.

Finally, we’ve heard about absenteeism and presenteeism, and, clearly, the message must be that balance is needed. It is possible to get too much of a good thing, so I think I better conclude my remarks at that point.

Thank you, Madam Chair. Can I start by acknowledging and agreeing with the member Chris Penk’s final comment there. In answer to his other questions, he asked a couple of questions effectively related to what is the appropriate point at which to draw the line, and what did we contemplate in respect of this legislation?

He asked about the prospect of unlimited sick leave, which, in the trade, is often called “flexible sick leave”—and, actually, a surprisingly large number of employers, in my observation, an increasing number of employers, do offer what is called flexible sick leave, whereby employees don’t have a fixed cap on the number of days that can be taken, but the number of days is effectively managed based on the employee’s need and the ongoing employment relationship. There’s relatively good evidence out there to show pretty good health outcomes and also to show that, actually, if taken in the round, it doesn’t increase the overall number of sick leave days that are taken. So it’s not an unreasonable prospect.

For the purposes of this legislation, though, we wanted to keep it a reasonably simple piece of legislation that could be interpreted relatively easily by employers. It was, broadly speaking, within the current framework that met our objective of ensuring that New Zealanders do have adequate sick leave and that struck a reasonable balance. Taking all of those things into account, taking account of the fact that around about half of employees in New Zealand do currently have 10 days or more, 10 days in the end is a place that we have settled in terms of the legislation.

In respect of the member’s second question, which he termed a “half-way house” option—the working from home option—we don’t really need to make any changes to this legislation to contemplate that, because it is something that can be worked through in the normal course of employment relationships at the moment. An employee in that situation who did not feel that it was appropriate to come into work, because they were worried that they might spread an illness, but is still willing to carry out their work, but to do so from home, can arrange that currently under the terms of their employment agreement and in discussion with their employer, and that would be considered a day at work under those circumstances.

So I think we do need to allow for a bit of flexibility and for the employment relationship, to some degree, to deal with those sorts of circumstances, and I’ve observed in recent times, in fact, in this complex, some colleagues who have, effectively, done that—have taken a more precautionary approach to perhaps a common cold—where, in past years, they might have come into work and spread it around, but because of the heightened awareness around COVID have taken a precautionary approach, stayed at home, Zoomed in, and done their work from there. We can do that within the existing employment provisions that are in place.

Thank you, Madam Chair. I think the Minister in the chair, Michael Wood, put it quite succinctly in one of his responses where he said it is about how we treat people. That’s exactly what it is. People should be able to take sick leave when they are unwell. They shouldn’t have to worry about their jobs or their incomes when it comes to that regard. That is something, as has been pointed out a few times now, that COVID has taught us—the really quite detrimental potential consequences if people do turn up to work sick, and especially during a worldwide pandemic.

Now the Minister did mention, I think it was called, flexible sick leave. At Air New Zealand, in fact, when I was there, we had what was called “undefined” sick leave, and it was quite interesting to see that despite people having an unlimited number of sick leave days available to use when the need would arise, sick leave numbers didn’t go up. In that aspect, I think it is quite sad to hear from the Opposition a lot of statements on hearsay; in theory, when people have more sick leave, they are going to take more sick leave. It shows a very dim view of how they view working people, and I think that’s quite sad to see. I would like to ask the Minister if there’s perhaps any data on corroborating those statements from the Opposition. Is there, in fact, any data available that shows that workers see sick leave as an entitlement and hence take this entitlement in greater numbers if sick leave is increased?

Now, what we did hear all through our submission process in select committee is that five days of sick leave really isn’t sufficient, and we have seen that our sick leave in this country is low when you compare it to other countries, for example Australia. But the other thing that we really need to point out is the fact that not only will it make people hesitant calling in sick if they may perhaps have detrimental consequences by calling in sick, perhaps even losing their jobs, but there is a culture in New Zealand where people just toughen it out, where they soldier on, and we did hear that in particular from some of the submitters during our select committee process.

The Public Service Association (PSA) told us that members told them that there is a predominant attitude in New Zealand to “man up” or soldier on, especially when it comes to paid work commitments. The PSA did tell us—and this goes back to that productivity argument and what is termed “presenteeism”—that they had research available that showed that healthy employees are nearly three times as productive as people that potentially come to work not feeling quite up to the job and feeling a little bit ill. So it is a logical conclusion to say that people who continue to work whilst they are sick is risking also getting more people sick, and then, again, that that productivity argument just continues on, not only for the person themselves but, again, for their workmates.

In general, I think fostering a long-term culture of employees using sick leave rather than soldiering on—so using that sick leave when they need it rather than soldiering on—is a good thing, and it’s something that we should, as a Government, absolutely enforce and say not only is it about the productivity aspects but it’s also about the fact that people shouldn’t be able to take their germs and their bugs into the workplace. So I think, yeah, as the Minister already also said in one of his responses, it is really about simple maths—but, of course, we do know that the Opposition isn’t very good at adding up and mathematics, so perhaps that’s where they got it wrong. But I would like to conclude my contribution with that. Thank you, Madam Chair.

I found myself in the very rare if not unique position in the first 30 seconds of that contribution by Marja Lubeck to be strongly agreeing with her. She then went on and said some rather interesting things that I strongly disagreed with, but the one point she made at the very start of that contribution was that we have very little data on this. Indeed, the regulatory impact statement and the departmental disclosure statements have a paucity of information about what problem we’re trying to solve. Are we trying to solve a problem that there is insufficient sick leave to manage appropriate absenteeism? Are people, as many contributors have said, exercising presenteeism? We’ve heard anecdotes of that but we have no data about it.

The Minister has referenced in previous speeches on this topic the Southern Cross and Business New Zealand report, the latest of which was in 2018, which demonstrated that, I think, there were 7.4 million days of time lost through illness in New Zealand in 2018, and that that constituted on average per full-time worker equivalent, I think, of 4.7 days per year. Now, the Minister has also said that half of our workforce actually already have 10 days, and so at a macro level there is an entitlement on average of 7.5 days per year. If workers are on average taking 4.7 days a year, it seems at least on the face of it that the case for change hasn’t been made.

So my questions to the Minister are these. Firstly, what evidence is there that there is abuse of sick leave? I think that’s important. There’s no point throwing epithets out that suggest that there is widespread abuse of sick leave provisions—certainly, I can give anecdotes as well, as an employer of some long period of time, but I would resist the temptation to draw a conclusion about the New Zealand workforce more broadly on the basis of anecdote. But similarly, I don’t believe, and I have searched, that there is evidence yet of the phenomenon of presenteeism on a widespread basis and the data from the Southern Cross Business - New Zealand report would back that up.

Now, Marja Lubeck then went on to talk about sick leave entitlements being low. I don’t think that’s the case, and the so-called culture of “soldier on” is not evidenced by the data. Indeed, I would be very interested in seeing the 2020 data, and I encourage the Minister to look into that when it’s available, because last year illness fell off a cliff. We were all worried about a pandemic. That is true. But when normally 400 people a year die of seasonal influenza—more than 400—and thousands are hospitalised, the death toll last year from seasonal influenza was zero. So we had a cold and flu season that was completely wiped out virtually by the fact that we started at home, we didn’t import influenza—because we were keeping COVID out we actually kept seasonal influenza out. And one would imagine that as a consequence of that, the total number of days taken, time lost, through illness last year should have dropped as well, quite significantly. So it will be interesting to see, particularly given our productivity went down—we actually worked at work fewer days—whether or not the case for change, the case for this legislation has been made.

So my question to the Minister is twofold, effectively. Am I correct in saying that there is no evidence of abuse of the sick leave process on a widespread basis but it’s equally no evidence of presenteeism going on, and does he think that that would be good data to collect? Because it seems to me that in order for us to consider whether this has been a success or whether we need to do more or less or something else, actually we need a much better evidence base, because, as far as I can tell, it doesn’t exist.

I thank the member for his questions. In respect of the evidence the member speaks about, I have not seen widespread evidence of abuse of sick leave across the workforce. There will, of course, in any large-scale group be isolated examples that people will come across from time to time, but certainly that’s never been presented to me. In respect of evidence of presenteeism, I would point the member to the evidence that’s been presented to the select committee in the course of submissions. We have very clear evidence that has come through there of people with minimal sick leave entitlements who have come to work when they’re unwell.

💬 Hon Michael Woodhouse: Clear anecdotes.

The committee receives evidence as part of its hearings on a piece of legislation. This is real-world evidence from people. It is manifestly clear to me that there are workers who, through no fault of their own—they do their very best in their workplaces—will face situations where due to their own illness or the illness of dependants, they need to access more than five days of sick leave per year and do not currently have that. That is the fundamental problem that this bill is attempting to resolve or mitigate, and I just challenge any member to seriously mount an argument that we don’t have workers in our society who need more than an entitlement of five days per year given those realities of life.

In respect of the second set of questions that Mr Woodhouse asked, he rightly noted that a range of factors over the course of the year of COVID have resulted in a range of measurements in relation to communicable diseases being significantly reduced, and he noted influenza as being one of them that’s of sentinel measure in our society. Of course, a big part of that were the heightened public health measures, but I think a very big part of it was the fact that people have had a much, much greater awareness of the need to stay at home when they’re unwell to prevent spreading illnesses. Now, the main driver of that has been COVID, but I have absolutely no doubt whatsoever that it’s had significant flow-on benefits.

In my first comments in this debate today, I did note that there is some early evidence emerging from Government departments which is coming through, I think, in the answers to Estimates questions, that the number of sick leave days taken over the course of last year in those Government departments has decreased significantly. So bringing those two things together in answering the member’s question, it is my view that where we have provisions that mean that workers don’t come into work and don’t spread their bugs, there is some positive outcome there in terms of not increasing the need for sick leave across other workers in the workplace.

Thank you, Madam Chair. We’ve learnt quite a bit, actually, in this debate, so it’s useful and I thank the Minister for his indulgence in giving us an insight into his thinking on some of these subjects. But I want to come back to this question of prorating because it is an issue, and it is an issue that exists currently, but is only going to be exacerbated by these changes that are being proposed by this piece of legislation. Notwithstanding that the Minister has made the point that sick leave for a part-timer under this legislation is available only on the day that that part-timer would normally work, the simple reality is that that 10 days is available and there will be cases and instances where it will be used. I know from my own personal experience as an employer and a business manager that there are some employees who manage, every year, to use every single day of their entitlements, and there are some, equally, who manage simply not to use any of it. The balance probably is somewhere in the middle, and that’s the practical reality. But what this legislation does is it upsets that balance disproportionately against smaller businesses.

I want to draw the committee’s attention to a submission made by Retail New Zealand. At select committee, their chief executive, Greg Harford, made, I think, a very good point that the vast majority of part-timers in their sector choose to work part-time for a whole lot of reasons. They don’t want to be full time as it suits them to be part-timers. They think that up to 20 percent of people working in the retail sector are actually employed on a part-time basis. What this bill will do is actually encourage retail employers—instead of employing part-timers, they will be encouraged, by dint of this legislation, to employ full-timers. The simple reason for that is that if a business employs three part-timers, they face a potential sick leave liability per annum of 30 days, but if they employ and were to convert those three part-time jobs to a full-time job, then their sick leave liability risk is just 10 days. So that’s the simple maths of the situation, and notwithstanding the views of those that have come to this Parliament from the trades hall, that’s the practical situation that exists in business. Businesses will adapt, adopt, and modify their business in the face of Government-imposed costs and legislation, and they will adapt, adopt, and reconfigure their businesses to be profitable and to be competitive. If this is just another cost on a business, albeit with good intention, then businesses will adjust the way they employ and the way they hire and the way they take on people and their businesses.

So a helpful solution to this is actually my proposed Supplementary Order Paper 36, which the Minister may like to consider, which would effectively provide an opportunity to achieve a prorating concept that would simply and easily be adopted. So I would like the Minister to give that some consideration and to give it some thought, because prorating and the issues around prorating are deeply significant. As I say, this is something that is already an issue, only exacerbated and made far worse and far more front of mind, particularly for small-business operators. Members on the Government side are very quick to cite large, sometimes internationally owned, corporates who actually can have the bandwidth—if I can put it that way—to accommodate these extra costs that are being foisted upon them. But it’s the small-business operators who don’t have that flexibility. They don’t have the flexibility that the large businesses do. So I would commend my Supplementary Order Paper to the Minister and look forward to him and his party supporting it.

Look, I have commented on this a number of times already, but just to make another comment in terms of the point that Mr Simpson is making around prorating. It is good to know that he does have a relatively balanced view of things, because not only does he have such a dim view of employers that he thinks that they might discriminate against people who might have dependants in their hiring decisions; he also thinks that employees are just sort of primed and waiting to take advantage and play hooky and use all of their sick leave when they’re not already sick. I have a much more optimistic view of human nature and the way that Kiwi workers and employers treat one another, on the whole.

I do note that in respect of his Supplementary Order Paper 36, and I don’t know if he’s actually realised this, it would actually reduce—literally reduce—the sick leave entitlements below what many New Zealand part-time workers currently have. The number two effect of the Supplementary Order Paper would mean that any worker in New Zealand who works less than 2½ days per week would receive less than the current statutory minimum of five days’ sick leave per year, and I’m certainly not going to support a Supplementary Order Paper that actually reduces the currently available sick leave entitlements of New Zealand workers as we’re coming out of a global pandemic, which really points to the need for workers to have adequate sick leave.

Well, that was an extraordinary statement from the Minister we heard just a moment ago. He said that he takes an optimistic view of workplace relations, and I think that’s certainly true. Optimistic—hopeful, perhaps. He said that he doesn’t think that there would ever be discrimination based on people having dependants. Well, here’s a bit of reality: the more laws the Government makes that entitle people to extra leave, the more expensive it is for employers to employ people who are more likely to take leave. If his view of human nature is really that no employer has ever looked at an employee and thought “Is this person more or less likely to take leave?”, then, first of all, there’s a whole range and manner of statistics in the employment literature he won’t be able to explain, but also he’s just out of touch with basic reality.

Then he said “Ah, such a dim view that Scott Simpson has”—that nobody will ever take advantage of sick leave when they aren’t sick. Has he spoken to the employers in his electorate even? To the hairdressers who say “Actually, I know that my employees will take advantage of this.”? That’s what they’re saying out there. That’s because this Minister, as he says, has an optimistic view of human nature when it comes to workplace relations. Well, actually, if it was true that all people were angels, we wouldn’t need to be here making rules to try and restrain undesirable behaviour. It’s a totally illogical construction that he’s put on the way workplace relations actually work.

So here’s a couple of realities. The Minister can say that he wants this law because he thinks it’s important that there’s more sick leave, for any number of reasons, but it’s also important to confront the reality that employers are concerned that employees will take advantage of it—not all of them, not most of them, not even many. But the idea there’s not a concern among employers that people are going to take advantage of this—and you watch: sick leave rates will go up at the margins because of this law—is a denial of reality, and the reality that people trying to run small businesses face needs to be put on record in this committee.

Here’s the next thing. The Minister says he doesn’t think that there would ever be discrimination based on circumstance. He thinks that it’s possible to regulate up the cost of people taking leave, and he doesn’t think that’s going to have a cost for people more likely to take leave in the view of some employers. You know, we’ve got to acknowledge the reality that that will happen. So I say to the Minister that there’s people watching—actually, no, there won’t be, because they’ll be out working. But people who are actually out working, if they hear about this later, will say to him “Let’s have some reality.” It’s nice that the workplace relations Minister has an optimistic view of human nature and employment law, but if he was right, we wouldn’t need employment law.

I move, That the question be now put.

The question is that the Hon Scott Simpson’s amendments to clause 4 set out on Supplementary Order Paper 36 be agreed to.

The question is that Jan Logie’s amendments to clause 5 set out on Supplementary Order Paper 34 be agreed to.

Jan Logie’s amendment inserting new clause 5A as set out on Supplementary Order Paper 33 is out of order as being outside the scope of this bill.