Holidays Act Programme Update
Capital, Coast and Hutt Valley, and Wairarapa Payrolls
Why are we changing?
Holidays Act 2003 was legislated with the purpose of promoting work life balance and it sets out minimum leave standards all employees are entitled to. The Holidays Act 2003 also sets out how payment for the following leave types are to be calculated and paid:
- Annual Leave,
- Public holidays,
- Sick Leave,
- Bereavement Leave, and
- Family Violence Leave.
While payment calculations might seem straightforward for those working standard regular hours, it has proven to be complex for employers such as Te Whatu Ora, who have a workforce on rostered hours, over 24 hours a day and 7 days a week.
Ernst Young were engaged to determine if the Capital, Coast and Hutt Valley, and Wairarapa payrolls had breached the Holidays Act 2003. Their review identified a total of 22 breaches of the Holidays Act 2003 across the three payroll systems that require rectifying.
What is being done to fix the breaches?
A Holidays Act programme team has been established for Capital, Coast and Hutt Valley, and Wairarapa and they started some initial work in 2020. In 2022, following a number of key decisions, the Programme team commenced the work needed to:
- Fix the breaches and enable legislative compliance through the rectification of the:
- existing payroll systems; and
- end to end processes found to have breached the Holidays Act 2003;
- Work with Ernst Young to determine if any current and former employees are entitled to remediation payments resulting from the breaches that have been identified. This work will cover the period from May 2010 to the date at which the payroll systems are made compliant.
To fix the breaches, achieve compliance and determine if any arrears payments are due to current and former employees will be a time-consuming process. This is driven by the complexity of the work and the fact that Te Whatu Ora is one of New Zealand's largest workforces. This means that the Holidays Act Programme [approx. 16 projects across the organisation] is a significant undertaking with an estimated 270,000 current and historic employees impacted.
Assuring the right things are done
Throughout the period of the Programme’s work the business, unions and other key stakeholders have and will continue to be engaged. With respect to assurance all projects must meet the requirements of an overarching Assurance Framework that has been established. This framework requires high evidential standards to assure all stakeholders including you that the work has been completed to an acceptable standard and that the outcomes comply with the Holidays Act 2003.
What will we have to do differently?
To ensure we continue to comply with the Holidays Act 2003 legislation once the payroll systems are rectified, our people leaders and employees will have some new or different processes to follow. The Programme team is working through these now with help from subject matter experts from across the Capital, Coast and Hutt Valley, and Wairarapa Districts.
On-going information and support will be made available over the next few months to help people leaders and employees to understand what is changing for them and what they will need to do differently.
One key change for all employees will be that their annual leave will be converted and managed in weeks. There will be more information regarding this change in the coming months, but for now please feel free to read about the Holidays Act 2003 Compliance on Employment.govt.nz
Where are we with our Programme?
The three elements of the Programme are:
- Review – (Completed) An independent external audit review process which identified the key areas of Holidays Act 2003 non-compliance has been completed. Ernst and Young completed our audit and produced Findings Reports for each of the Districts. The Review Stage was completed in August 2020.
- Rectify – (In Progress) This work addresses areas of non-compliance found in the Review Stage. Non-compliance has come about from a complex mix of process, policy, practice and payroll system issues. The Rectification work is well underway and it is determining what changes need to be made to ensure all of our system/s, policies and processes are compliant – and that employees are paid correctly going forward.
- Remediate – (In Progress) This work is about reviewing what has already been paid and determining if any current and former employees are owed money from any identified areas of non-compliance. This work goes back to 1 May 2010. Our Programme is working with Ernst Young to calculate if remediation payments are due to current or former employees. These determinations are based on an individual’s employment and pay history which is compared to the Holidays Act 2003 leave entitlement.
Remediation Payments
It is important to note that not everyone will receive a payment as some employees were paid their correct leave entitlements.
At this time there is no immediate action required for current or former employees Capital, Coast and Hutt Valley, and Wairarapa.
Like many public and private organisations across New Zealand, Te Whatu Ora has been impacted by Holidays Act 2003 compliance issues.
We’re committed to addressing these issues, to ensure current and former Te Whatu Ora staff receive their correct leave entitlements.
We will keep you informed about progress and next steps. For current employees, you can read more on your local intranet. For former employees, more information will be posted here over the coming months.
Frequently asked questions
Who is a “current employee” for remediation?
A current employee is a person who is currently being paid by the Capital, Coast and Hutt Valley, or Wairarapa Payroll teams at the point in time when the Holidays Act Programme is ready to make the remediation payment.
If I am entitled to a payment, how much am I likely to receive?
It is not possible to give an estimate of how much each employee will receive because each person’s earnings history and leave patterns are unique.
Each employee's payments will be recalculated individually for the remediation period from 1 May 2010 to the last working day or the end of the last pay period. As a result, each eligible payment amount will be different.
Each person who is entitled to a payment will receive a statement of how that entitlement was calculated.
I am about to leave my current district or Te Whatu Ora, how does this impact my remediation payment?
Once you leave a District whether it is to go to another Te Whatu Ora District or another organisation you are no longer considered a current employee of that District and your remediation calculation will then be paid with the former employees. That payment will be after the current employee remediation payments.
When will current entitled employees receive a payment?
Payments dates will vary for each District, as each District is working through their own process and there are many variables and assumptions.
Payment dates will vary for each payroll because of the complexities being worked through by each project team. The projects are also being sequenced so that we manage the work required and the risk associated with changing payroll systems.
How will any remediation payment affect my income tax?
The Inland Revenue website contains useful information on the tax treatment of lump sum payments such as holiday pay. You can also contact Inland Revenue directly on 0800 227 774. In general, when holiday pay is paid as a lump sum it is taxed.
How will any remediation payment affect my benefits?
The Ministry of Social Development (MSD) website has the contact details to discuss what happens if you receive lump sum payments with the appropriate area of MSD.
How will KiwiSaver and superannuation contributions be managed?
All superannuation contributions (employee and employer) will be calculated and deducted as part of any remediation payment.
How will student loan repayments be managed?
Student loan repayments will be calculated as part of any remediation payment.
What about voluntary KiwiSaver deductions?
Voluntary KiwiSaver deductions won't be deducted from any remediation payment. It's the responsibility of the individual for their voluntary KiwiSaver deductions to be paid directly to Inland Revenue.
Is the Programme engaging with unions?Yes, we continue to engage regularly with unions.
When the Holidays Act 2003 compliance work began MBIE, the CTU unions and other involved unions agreed a baseline document for all 20 DHBs at that time (now Te Whatu Ora) to be audited against. Also a review framework was developed to be followed by the DHBs, rectifying the Holidays Act 2003 breach areas of non-compliance.
Te Whatu Ora Executive Leadership Teams are engaging regularly nationally with unions. Union representatives have also been invited to attend the District Holidays Act Programmes monthly Steering Committee Meetings. Engagement also continues through regular BAG meetings and other regular union communications.
Is the Programme keeping my information safe?
Yes. The Capital, Coast and Hutt Valley, and Wairarapa Districts maintain up-to-date and complete records of relevant employment information for employees. This information is used for a number of purposes, including the provision of entitlements and allowances.
The way the Districts manage and keep your information safe is critical to our business outcomes. We have a responsibility under the Privacy Act 2020 to let you know how this information is being used. We have to be mindful of our legislative obligations and ensure the information you have entrusted to us is used only for the purpose it has been collected for.
To be able to complete the necessary calculations and determine if employees have been paid accurately (back as far as 2010), information will be shared with a third party. Employees can be assured that the sharing of this information is being done in a safe and secure manner. We are not collecting any new information. The information is being used for the same purpose as it was originally intended when you gave it to payroll; which is to ensure that employees are paid accurately.
If employees wish to seek access to their employee information they should make a request to their manager. Requests to correct any personal information held by their District can then be made.
For more information:
Employee Information Policy
Privacy of Health Information
Release of Personal and Health Information
Request for correction of personal information.
Use and disclosure of personal information
Are other organisations also affected by this?
Yes. Many public and private sector employers in New Zealand are impacted and are working to resolve their own Holidays Act 2003 non-compliance issues.
How do I find out more?
Visit Employment NZ at their Leave and Holidays section.
If you have any questions, you can also email the Holidays Act Programme team.
Please do not email Payroll directly.
As at 29 June 2023
