The Holiday Pay Ass

There’s been more said today about payroll problems at MBIE and the police but the fact is the Holiday Pay law has been an ass since 2004.

Stuff reports State payroll blunder may be widespread, hitting private workers too.

A payroll blunder that left thousands of state sector workers underpaid may be widespread, meaning many in the public sector and in private businesses may have been short-changed.

The problem came to light after police and more recently staff at the Ministry of Business, Innovation and Employment (MBIE) were underpaid because of an error calculating their holiday pay and shift entitlements.

But Finance Minister Bill English on Tuesday signalled that the problems go back to the Holidays Act in 2004 and “there may be a widespread issue in the public sector as well as the private sector”.

I think it’s been well known there have been issues with the legislation that make it very difficult in some scenarios to follow the law.

Prior to 2004 , when paying part time employees with variable work patterns a common way of dealing paying holidays was giving them their 3 weeks (it changed to 4 weeks later) and paying them 6% of what they had earned over the year (liable gross).

The 2004 Holidays Act clamped right down on paying ‘casuals’ (Pay As You Go employees) like that. The new Act meant you could only use the 6% calculation in very limited circumstances (on call non-rostered work). There are many part time workers who were excluded.

In 2010 the Government reviewed the problems with the Act but put any resolution in the too hard basket and left things as they were – so employees struggled on the best they could with an ass of a law.

I know of large private employers who work around the law (don’t follow it) because it’s just too difficult following the letter of the law.

I’m sure many payroll operators won’t be aware of what the law requires them to try and do.

I think most employers strive to pay Holiday Pay fairly, but find their own way of doing it.

I don’t think the problem is widespread in that most employees will be have paid reasonably fairly, but complying with the Act has been a widespread problem for over a decade.



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1 Comment

  1. Robby

     /  8th March 2016

    The issue here is what is known as ‘Relevant Daily Pay’
    What happens in a lot of businesses (like the one I work for), is that on a sick day you get 8 hours pay, which is a normal working day under most full time contracts. Except that on most days except Friday, I work at least nine hours. Which means I should be getting more than 8 hours pay for a sick day. There is a running joke in my workplace, about how we get paid more per day while on annual leave, than we do for a normal day at work, and that maybe the boss is giving us a hint….. 😉


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