Whanganui District Council Holidays Act Remediation
The Holidays Act 2003 outlines leave entitlements for all employees, and the rates of pay for each type of leave.
The provisions of the Act are relatively straightforward for employees who work traditional eight-hour days and 40-hour weeks, without allowances, bonuses or overtime payment. However, the Act has proven to be highly complex for organisations with staff who work shifts, variable days or hours and those who work part-time. It is also complicated to administer for staff who may receive payments such as allowances in different pays. This has resulted in widespread non-compliance with the Act both in public and private sector organisations in New Zealand.
Working with independent experts, we have identified that there have been errors in calculating leave payments for a relatively small number of current and former Whanganui District Council staff.
The specific areas that we have identified as an issue in certain circumstances relate to the Average Weekly Earnings (AWE) calculation, the Ordinary Weekly Pay (OWP) calculation and the Average Daily Pay (ADP) calculation. We have also identified an error with the accrual of sick leave entitlements for staff who work fewer than 5 days per week.
Whanganui District Council has committed to remediating any underpayments and under accruals of entitlements back to 2015.
What have we done so far?
So far, we have had independent experts – the NZ Payroll Practitioners Association (NZPPA) – undertake an audit of our payroll to identify any and all the areas that need to be corrected. All of their findings will be implemented.
This report has been presented to our Executive Leadership Team and the Risk and Assurance Committee has also been informed, along with councillors who do not sit on that committee. Our union partners – ACE and the PSA – have also been updated on these findings, along with the Ministry of Business, Innovation and Employment (MBIE).
Who is affected by these errors?
Not all current or former staff will be impacted by the audit’s findings or owed a remediation payment.
NZPPA have identified that the staff who are impacted generally fall into one or more categories:
- The Average Weekly Earnings (AWE) error affects employees who had a change to their permanent hours of work within a 52-week annual leave calculation period.
- The Ordinary Weekly Pay (OWP) error affects employees who regularly worked additional hours (i.e. hours that were time sheeted for payment, over and above contracted hours).
- The Average Daily Pay (ADP) – this error relates certain pay codes not being included in the gross calculation and an incorrect divisor being used. As ADP is only used where Relevant Daily Pay (RDP) cannot be calculated, this not a frequently used calculation, so we do not expect many employees to be affected by it.
- The Sick Leave entitlement error affects employees who work less than 5 days per week.
NZPPA have also identified that multiple pay code adjustments are needed, including some allowance codes. These changes may impact leave calculations. Currently we do not have full details of what the impacts of this will be or who may be affected by them. When we do have that information, we will share it as an update on this page.
What are we doing now?
NZPPA are currently working with Fusion 5 (who support our payroll system) to finalise the script that will identify the staff who have not been paid correctly and calculate the payments that are owing to them, along with the staff who have not received the correct allocation of sick leave.
This process will also enable us to understand the impact of the pay code adjustments that are being made for compliance and provide more information about how this affects remediation payments. NZPPA and Fusion 5 are also working on system fixes for the issues that have been identified to make sure that these do not reoccur and be confident that we are fully compliant with the Act as soon as possible.
What happens next?
Once the recalculation script has been finalised and tested, NZPPA and Fusion 5 will run this and provide us with all the information that we need to remediate any underpayment made to former employees. Once we have that, we will make the payments to current employees as soon as possible.
For former employees who are owed a remediation payment, we anticipate making payments in monthly batches once we have confirmed your identification and contact details.
We anticipate Whanganui District Council Holidays Act Remediation for all current and former staff to conclude by the end of 2024, for everyone whose current banking details are able to be confirmed in that time.
How will you contact me?
If you are impacted by these errors, the council will reach out to you in August using the last contact details we had recorded for you to discuss how we can make the remediation payment to you.
If you think you may be eligible (you must have been employed by Whanganui District Council between 2015 and 2024) and you don’t believe we have your correct contact details, please fill out the contact details form so we can contact you. If you require further information or have a specific query you can also email remediation@whanganui.govt.nz.
For the time being, nothing. We will be in touch with all those affected from August 2024 onwards. If you do have concerns or would like to reach out then please do so by emailing remediation@whanganui.govt.nz.
If you have worked for Whanganui District Council, you believe you are included in this remediation and you know we do not hold your most up to date contact details then please fill in this form today.
We will not be recouping any historic overpayments in this process, but will implement the changes needed to ensure that such overpayments do not occur in future.
We will be in contact with each affected individual on a case-by-case basis. If you are identified we will be in contact from August 2024 onwards.
Keep in mind, a significant number of employees will not receive a payment at all. As for the amount, each individual has a unique earning history and leave pattern and every case has been assessed individually – so each payment amount is going to be different.
While there are payments owing, these are more limited in scope than what many other organisations have identified and are unlikely to have any significant impact on rates or services.
We commissioned independent expert providers (NZPPA) to undertake an audit of our Holidays Act compliance to ensure that we have fully met our legal obligations in regards to the Holidays Act 2004; Employment Relations Act 2000; and Wages Protection Act 1983, as well as our contractual obligations. All of NZPPA’s findings have been accepted and are being implemented, with the changes being made by a specialist service provider (Fusion5) in conjunction with the NZPPA.
The council has engaged with the Ministry of Business, Innovation, and Employment throughout this process and will continue to do so.
We believe these processes will ensure that the calculations are accurate and that our payroll processes are now fully compliant.
The council’s unions – the Public Service Association and the Association of Council Employees – are aware of the findings of the audit. All communications will be shared with them in advance to provide an opportunity for input and feedback and enable them to fully support their members.
According to our legal obligation, we plan to look at the last six years from the date we identified that aspects of our system were potentially non-compliant.
The remediation payments will be treated as an ‘extra pay’ for tax purposes. We encourage you to contact IRD (www.ird.govt.nz) or other relevant organisations for advice about whether your remediation payment affects any agreement you have with them about:
- your current earnings
- benefits
- child support
- working for families
- any other matters.
All remediation payments are subject to KiwiSaver and student loan deductions. If you are a former employee who is owed a payment, we will obtain this information from you – along with your up to date bank details – before any payment is made.
There are three reasons why you may not have received a letter:
- We may not have contacted you yet. Our intention is to reach out to affected people in August 2024
- You may be one of the people who are not affected by these issues. If you would like to check, email remediation@whanganui.govt.nz
- The address or contact details we have for you may not be current. We encourage former staff to complete a contact details form online to ensure any correspondence can reach you.
If you have been contacted, you would have also been asked to fill in our online form which will ensure we have your current details, including your bank details, before any payment is made.
We will need you to provide documentation to verify your identity and to confirm that you are authorised to act on behalf of the estate. If you are the authorised person for someone who has died and who left Whanganui District Council during this time period, please contact us at remediation@whanganui.govt.nz and we will get in touch with you.
The Whanganui District Council was alerted of the remediation requirement in 2023 and has been working on the correction since then, engaging the correct sources and information in regards to legislation.
Accuracy has been paramount in this remediation and clarification was required before we could announce any specific details. Many organisations have been affected by the Holidays Act 2004, including in the public and private sectors.
No, we will not be making interest or compensation payments. Several factors were taken into account when determining whether it was suitable for the council to provide extra payment in the form of interest or compensation including that:
- The council is not legally required to provide interest or compensation in this scenario
- The council is not seeking to recover any overpayments from current or former staff, or to reduce any underpayments as a result
Yes, we can still make any payment owed to you. If you don’t have a New Zealand bank account, we’ll need additional documentation from you, including proof of your bank account in your country of residence, which should show your:
- Account number
- Swift/IBAN number
Your bank must be able to accept payments from New Zealand. Please note that the payment amount will be subject to the exchange rate at the time of processing, and your bank may charge a fee for receiving an international payment. Additionally, any payment we make to you could impact your tax obligations or benefit entitlements. For more information, please refer to Inland Revenue (www.ird.govt.nz).