Govt gets heavy on holiday pay

Two employers referred to Employment Relations Authority, deadlines for others

The Government is taking legal action over two employers’ failure to comply with holiday laws and has agreed deadlines with a further 64. The move comes two years after widespread problems of compliance with the Holidays Act were revealed.

The issues centre around the fact that there are two ways to calculate holiday pay — either on the basis of ordinary weekly pay or an employee’s average weekly earnings over the past 12 months.

Employers must pay whatever gives the employee the most money.

But employers who calculate holiday pay based on an employee’s contracted hours can get caught out if that person does variable hours or earns a commission or other variable pay.

Stu Lumsden, labour inspectorate national manager for MBIE, said it had worked with 156 employers between July 2012 and September 2017 on Holiday Act non-compliance and all had a degree of non-compliance.

Of those 64 have entered into enforceable undertakings — a voluntary agreement between the employer and the inspectorate to address the breaches within a certain time frame.

Lumsden said employers who failed to comply with the agreed terms within the enforceable undertaking or an improvement notice may be taken to the Employment Relations Authority.

“To date, only two employers have been referred to the Employment Relations Authority, with the vast majority working together with the Inspectorate to remediate both current and former employees.”

An MBIE spokesman said it was not appropriate to name the employers as the cases were ongoing.

Those most at risk are businesses who have employees with fluctuations in the hours they work, or receive additional pay on top of their normal wages, such as for shift work or commission payments.

Last month Spark called for former staff to come forward and check if they were owed any holiday pay in public advertisements in newspapers around the country.

A Spark spokeswoman said the move was made in light of a recent review of its payroll situation.

“Spark has recently undertaken a thorough review of the Holidays Act — something we believe many other New Zealand employers — including several of the Government employing bodies — are also undertaking. She said the Act, with its complex calculations and different interpretations, had been sometimes challenging to comply with.

The company had resolved the issue with current employees and past employees which it had contact details for but was asking for any staff employed between January 2010 and March 2017 to come forward.

“We are now trying to resolve the payments for those past employees for whom we have outdated or no contact details — and we hope these advertisements we’ve placed will do the trick.”

Data from MBIE shows employers have already paid out $4.8 million to around 15,000 employees between July 2012 and September 2017. Those

payments averaged between $29 and $1300. On top of that the police have paid out around $39 million.

Others have yet to pay any money out.

A spokesman for McDonald’s, which employs 9000 staff, said it was still working through the issue with MBIE and its external specialists. The spokesman said the company had engaged a third party payroll expert to audit its systems.

Russel Creedy, chief executive of Restaurant Brands, which employs around 3800 people across its KFC and Pizza Hut businesses, confirmed it too was still working through the issue.