Te Whatu Ora owes health professionals more than $3b for leave and holiday pay

Many doctors cannot take leave because there is no-one to replace them, the Association of Salaried Medical Specialists says.
Many doctors cannot take leave because there is no-one to replace them, the Association of Salaried Medical Specialists says. Photo credit: Getty Images

By Ruth Hill for RNZ

Thousands of doctors, nurses and other health workers are owed billions of dollars for incorrectly calculated holiday pay and untaken annual leave, according to Te Whatu Ora's first annual report, which has just been released.

It shows that as of the end of June, the agency was carrying over nearly $1.2b annual leave - more than $16,000 each for its 72,594 staff FTE permanent and fixed term.

Association of Salaried Medical Specialists executive director Sarah Dalton said many doctors could not take leave because there was no-one to replace them.

"There's some ridiculous amount of annual leave owing to doctors, a thousand years I think, and that's a combination of people being unable to access their leave, or being reluctant to access their leave because they know what the effect will be on their colleagues in departments that are now routinely understaffed." 

Meanwhile, about 270,000 past and present Te Whatu Ora employees were owed more than $2.1b in Holidays Act remediation payments.

On top of that, there were overdue pay equity agreements (the subject of legal action by the nurses' union), additional duties payments from understaffing and collective settlements, Dalton said.

"All of those pile up and up and up, that's a massively complex set of transactions for payroll systems to try and manage using payroll systems that are not yet compliant.

"So, it may be that like some other unions, at some point we will have to contemplate compliance action." 

Resident Doctors' Association head Deborah Powell said some individuals were owed tens of thousands of dollars, "up to $50 or $60,000 in some cases".

 "That's their money that they're being denied. There's the Holidays Act, that's the worst, but there is pay equity money that's owed, there are collective employment agreements that have been settled but don't get paid out for six months, maybe longer.

"It's not fair."

Antiquated, fragmented payroll systems were yet another legacy of decades of under-investment in the health sector, Dr Powell said. 

"We're now in a situation where a majority of those payrolls aren't supported anymore. The original vendors of those systems have given up. They've moved on to more modern payroll systems."

Chief People Officer Andrew Slater.
Chief People Officer Andrew Slater. Photo credit: Newshub

Te Whatu Ora chief people officer Andrew Slater said the agency was "absolutely committed" to ensuring its staff were correctly paid.

"None of the payroll systems we inherited were compliant with the Holidays Act.

"Since July this year, we've fixed this issue on seven of our payroll systems which has seen around 34,000 of our people - or 40 percent of our staff - paid correctly. 

"Payments to date are $246.5m to remediate holiday pay over 13 years for 34,000 people."

Another 17 payrolls had yet to be "sorted out", which was "a huge task requiring specialist skills", he said.

Payroll Practitioners Association chief executive David Jenkins said outdated, non-compliant payroll systems caused frustration - but the underlying problem was the flawed Holidays Act itself.

"The Act's been in place since 1 April, 2004, and I get flooded with questions about it every single day. That's how bad it is." 

The previous government started a process to overhaul the legislation in 2018 - but still had nothing on the table by the election, he said.

The health sector - with its thousands of workers on multiple contracts, working different shifts with varying allowances - was particularly complex. However, all sectors were struggling, Jenkins explained.

And in many cases, remediation work was having to be done repeatedly, as changes to pay were made.

"The problem is when you go back in time and change gross earnings, it has a ripple effect going forward. So it means all the work you've done has to get re-done, which costs you a lot more money. 

"And the longer the system is not doing it correctly, the more liability you're creating."

Te Whatu Ora said it expected to pay out most of the Holidays Act arrears owed to current employees by mid-2024 and payments to former employees will also start next year.