Holidays Act underpayments could cost New Zealand billions - Mike Treen

The Holidays Act agreement has long been a thorn in the side of workers trying to ask their bosses for time off.

An overhaul is underway after thousands of workers were shortchanged on annual leave, leaving businesses and government departments with large bills for their historic underpayments.

Appearing on The AM Show on Wednesday, Unite Union national director Mike Treen said this was "theft".

"Workers were denied what they were legally entitled to," he says.

"This was done wilfully, if not entirely knowingly, but it was certainly done wilfully because there was warnings made over the years."

Holiday pay is currently calculated based upon what would give employees the most money - the weekly pay at the start of the holiday or the average weekly earnings over the past 12 months.

However this can be confusing when dealing with flexible working arrangements - and the cost of fixing past mistakes could hit New Zealand employers hard.

"When the failure to provide the entitlement was identified as a major issue a few years ago, it was estimated that up to two million workers could be involved, and hundreds of millions and possibly billions of dollars could be owed," Mr Treen says.

Employers will be required to compensate workers, based upon their records for the previous six years. However Mr Treen says this isn't enough.

"The Government has got to step in and say to people they've got to have a responsibility here," he says.

"At the moment there is a legal entitlement to keep records six years, but I don't see why companies, big companies... shouldn't be required to keep these records until this has been remediated."

Newshub.