NZ businesses urged to check holiday pay as Labour claims win over zero hours

Tuesday 8th March 2016

New Zealand businesses are being urged to check their payroll systems to ensure staff are being paid their maximum holiday pay entitlements.

The warning, from peak body Business New Zealand, comes amid signs there may have been widespread underpayment by some government agencies since 2004 and that private sector workers could be affected too.

"We don't know if there is a problem with this in the private sector and, if so, whether it's minor or widespread," said the chief executive of Business New Zealand, Kirk Hope, in emailed comments following the discovery of apparently significant underpayments of staff at Ministry of Business, Innovation and Employment dating back to a 2004 change in the Holidays Act, before the super-ministry was formed.

Business New Zealand, the Council of Trade Unions and the Payroll Practitioners' Association have established a working group to examine the issue, which appears to arise from the fact that there is more than one way to calculate holiday pay and that the legal obligation is to pay the higher amount capable of being calculated.

In the meantime, Hope urged employers to check that their payroll systems are choosing "the way that gives the greater amount of holiday pay".

The calculations can be based on either ordinary weekly pay at the beginning of the holiday or average weekly earnings over the previous 12 months, "whichever is the greater."

"If you did some overtime or got a bonus just before Christmas, for example, you would get holiday pay at a higher than usual rate," said Hope. "It may be the case that some organisations have not been choosing the option that gives the greater amount. Businesses should check their payroll system to ensure they are calculating holiday pay the right way."

Finance Minister Bill English told reporters ahead of the National Party's weekly caucus meeting that the problem may be more widespread in the public sector and could affect private sector employees too. MBIE has conceded it has "significant" issues that may date back more than a decade.

The agency's minister, Steven Joyce, said there were unlikely to be major implications for any individual employee, but total sums would add up because of the time period involved.

Labour's economic development spokesman David Clark said the blunder showed "basic management incompetence".

“We know there are serious issues at Steven Joyce’s personal empire, MBIE," he said. "It’s clear they picked a flawed payroll system when they merged departments. Now it appears the problems extend to other state agencies."

The issue emerged on the same day as the Labour Party claimed a significant victory on the issue of "zero hour contracts", securing the support of the government's support parties United Future and the Maori party to force a change to the Employment Standards Legislation Bill, which Labour Relations Minister Michael Woodhouse had believed went far enough to prevent employment contracts that specify no hours of work and can require employee availability at short notice.

The changes lodged in a Supplementary Order Paper stipulate that "an availability provision may only be included in an employment agreement that specifies agreed hours of work and that includes guaranteed hours of work among those agreed hours" and "relate to a period for which an employee is required to be available that is in addition to those guaranteed hours of work."

Reasonable notice periods for shift cancellation will also now be built into the bill, along with "reasonable compensation" if reasonable notice is not given.

Trade unions celebrated the win, the First Union national director Mike Treen saying "virtually every family in the country could count one of their members suffering under these contracts."

BusinessDesk.co.nz

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