Holiday pay problems could hit teachers

Holiday pay problems could hit teachers

Teachers could be hit with a second round of pay troubles, with their payroll provider among those checking whether holiday pay has been distributed correctly.

More questions around the correct amount of holiday pay being calculated have been raised after the Labour Inspectorate found 19 of 20 cases it looked into were underpaying staff.

Today, Economic Development Minister Steven Joyce said Education Payroll Ltd (EPL), which now provides teachers' payroll services, is one of those looking into the complex payments.

"It does show the difficulty of companies of all types meeting their Holidays Act obligations. It's a pretty complex arrangement and some people are having difficulty making sure it is absolutely correct.

"EPL, which runs the teachers' payroll, have got concerns as to whether it is being done exactly correctly and they're just looking at that at the moment," he says.

However, it wouldn't necessarily amount to a "large amount of money", but rather a check that things were being done right in all cases.

The issue came to prominence earlier this month when the Ministry of Business, Innovation and Employment discovered issues with holiday pay and leave calculations.

It could extend back as far as 12 years when the Act was first introduced and affect the public and private sectors.

Labour's economic development spokesman, David Clark, says it's a serious issue, which MBIE has known about for at least six years.

"Now we learn there's major failure going on and Kiwis could be owed tens or hundreds of millions of dollars because the Government has failed to ensure the law is applied fairly.

"All evidence points to this being really widespread, but MBIE don't seem to have done the basic work to quantify how big the size of the problem is. That's embarrassing for Mr Joyce."

Labour Inspectorate general manager George Mason says since 2012, 42 employers were looked into for payroll-related breaches and more targeted investigations.

Employers at risk of not doling out holiday pay correctly are employers who have employees with fluctuating work hours, or who receive additional pay on top of their normal wages, including shift work or commission payments.

"The employer needs to make sure leave payment calculations are taking into account the fluctuations in the hours worked or pay received. They cannot just take a 'set and forget' approach to their payroll and expect to be compliant with the Holidays Act," Mr Mason says.

Of those 20 completed investigations so far, arrears have been found in eight cases, affecting around 24,000 employees.

The amount owed varies widely, between $70 and $1800 per worker.

Of those 20 cases, half were given improvement notices, six handed enforceable undertakings, one application was made to the Employment Relations Authority and also involved two voluntary compliance acts.