Retail NZ has backed proposed reforms to the country’s leave system; however, it raised concerns about the cost impact of a new compensation provision.

The industry group said it supports the Employment Leave Bill – which aims to simplify and modernise leave entitlements – but warned that the proposed 12.5 per cent Leave Compensation Payment (LCP) could place additional pressure on businesses.

“Moving to leave accrual in hours and a simpler, more consistent way of calculating leave payments will substantially reduce the compliance burden for retailers,” said Carolyn Young, CEO, Retail NZ.

“These changes are long overdue, with businesses of all sizes struggling with the complexities of the current leave requirements.”

However, the organisation said that feedback from its members raised concerns about the proposed LCP, which would apply to casual workers and to permanent staff working additional hours.

“After several years of challenging economic conditions, rising costs and tight margins, many businesses simply do not have the capacity to absorb a significant increase in wage costs,” Young added.

“For some employers, this 12.5 per cent payment risks their viability, and discourages flexible work arrangements.”

Retail NZ  is urging the government to review the proposed rate and align it more closely with what workers would typically accrue through sick and annual leave.

“We support a leave system that is fair, transparent and workable for everyone,” Young concluded.

“The core reforms in this bill move us much closer to that goal, but it is vital that the final legislation balances employee protections with the real operating conditions facing retailers.”

• Further reading: Retail NZ backs clampdown on nang sales.