Holidays Act Remediation
Kia ora, the Medical and Injury Centre’s Values are central to the way the organisation engages with its staff. Our Values are: Professional, Collaborative, Accessible, Inclusive and Safe. We welcome you to read through this important information to support you in accessing entitlement in line with the Holidays Act.
Holidays Act Important Information
You may have heard that many organisations have been required to review their payroll system to ensure they meet the calculation requirements outlined within the Holidays Act legislation. Medical and Injury Centre (MIC) is one of many organisations impacted. We have fixed the issue in our payroll system and now wish to ensure that any impacted employees due payments, are paid.
MIC has completed a thorough audit and reviewed the payroll systems and procedures in relation to the Holidays Act 2003. This review has showed that some leave payment calculations made 1 July 2018 to 11 September 2022 in our payroll system required resolution.
It has been identified that if you worked for MIC from 1 July 2018 to 11 September 2022 you may be entitled to a leave remediation payment. The issues identified were corrected and pay related calculations have been fully compliant since 11 September 2022.
Next Steps
We have identified employees who are eligible for a leave remediation payment from our payroll records. We are contacting the eligible employees to inform them about their leave remediation payments starting with current employees. Eligible employees are those who worked and took leave between the dates of 1 July 2018 to 11 September 2022.
If you haven’t received a letter or information from MIC about our Holidays Act remediation payment process and believe you may be entitled to receive a payment, please complete the following form: Holidays Act Payment Form
Once you’ve submitted the form, we will contact you to confirm whether you are eligible for a leave remediation payment. If you are a past employee and due a payment, you will be asked to provide us with identity verification and to complete some relevant documents. Once all steps have been completed, we will process your payment.
So far, we have:
- Engaged independent payroll specialists at New Zealand Payroll Practitioners Association (NZPPA) to complete an in-depth review of our payroll system to identify potential compliance issues, recommend solutions, and undertake a detailed sample of employee records to calculate leave remediation payments and correct any non-compliance issues
- Worked with external independent experts at NZPPA and our payroll system provider, legal team, and auditors to ensure that solutions and proposed plans are compliant with the Holidays Act 2003
- Implemented the recommended payroll system changes and reviewed internal processes to comply with the Act
- Completed a detailed independent audit process at financial year end to ensure that the changes implemented are effective, ensuring ongoing compliance with the Act
- Begun a process for making remediation payments to our current and former employees who have been impacted
What we are working on now:
- We are contacting current and former employees who have been impacted to advise them of their eligibility to a remediation payment
- Processing submissions from other former or current employees who believe they may also be eligible to a remediation payment
- We will commence leave remediation payments to eligible employees in the first half of 2025
- We will continue to work with the project team, external independent payroll experts, our payroll system provider, employment lawyers, independent auditors and stay connected with unions to ensure our payroll processes, remediation and leave payment is consistent, fair and accurate
What is the Holidays Act?
The Holidays Act 2003 sets out leave entitlements for employees and aims to promote a balance between work and other aspects of the lives of employees. It provides employees with minimum leave entitlements such as:
- Annual holidays
- Alternate holidays
- Public holidays
- Sick leave
- Bereavement leave
- Family violence leave (formerly domestic violence leave)
The Act sets out how leave and final pay are calculated and paid. Further information can be found in the MBIE Leave Guide
What is the issue?
Compliance issues with the Holidays Act have been identified in a number of Government agencies and New Zealand businesses. Like many other organisations, our payroll system and processes did not meet all of the obligations set out in the Act.
As a result, we undertook a review process with the support of external experts to identify and resolve compliance issues and provide remediation for leave entitlements owed to affected current and former employees.
What types of leave are we addressing?
The issues relate to entitlement and payment of the following leave categories:
- Annual holidays
- Bereavement/tangihanga leave
- Alternative holidays
- Public holidays
- Sick/dependent care leave
- Family/domestic violence leave
- Employment relations education leave
What timeframe does the remediation cover?
The relevant period that requires leave remediation payments is from 1 July 2018 to 11 September 2022. This is because:
- We are remediating the past six years back from 30 June 2024
- MIC was fully compliant with the Holidays Act from 12 September 2022. The leave calculations from 12 September to current time have also been reviewed, audited and confirmed to be compliant, so no leave remediation payment is due for leave payments made since 12 September 2022
Which employees does this apply to?
You may be eligible to receive a remediation payment from Medical and Injury Centre if you are a current or previous employee of MIC from 1 July 2018 to 12 September 2022.
Why were leave payments incorrectly calculated?
The Holidays Act 2003 is a complex piece of legislation and the method for calculating various types of leave entitlements may have led to calculation errors for some current and previous employees.
Calculations can be difficult as the Holidays Act 2003 refers to Annual Holidays being paid in weeks, while other types of leave such as Family violence leave, bereavement leave, alternative holidays, public holidays and sick leave (FBAPS), are paid in days. There are also different ways of calculating what an employee should be paid for a specific day or week of leave such as Ordinary Weekly Pay, Average Weekly Earnings, Relevant Daily Pay and Average Daily Pay. If the incorrect method of calculation is used, it can result in overpayment or underpayment to an employee.
Calculation errors can also happen when employees receive additional allowances, lump sum payments, work regular overtime, or their daily or weekly hours vary. Some of these payments are included in leave calculations, while others are not. It is not straightforward. The way payments are set up to be included or excluded from gross earnings for the purposes of leave calculations can therefore also impact entitlements.
What remediation work has been done?
As part of our process, Medical and Injury Centre (MIC) engaged independent experts to undertake a thorough review of our payroll systems and processes. Our internal specialists and external payroll experts worked together to review an in-depth sample group of employees. This represented a range of different roles and situations, to identify and calculate any historical payment errors to current and former employees.
Our remediation process and estimated calculation methodology has been independently reviewed by experts including our lawyers and auditors, to ensure appropriate processes and systems are in place to appropriately pay current and former staff for any leave payments they may be owed.
A number of overpayments for leave entitlements paid out were also identified during this period from the sample employee group calculations process (i.e. where staff were paid too much). MIC has chosen not to seek reimbursement from staff for any overpayment that may have occurred prior to the system and internal processes being remedied. Instead, the focus has been on identifying instances where employee were underpaid and remedying these underpayments.
When did Medical and Injury Centre become compliant with the Holidays Act?
Paying our people correctly going forward is a priority and we completed a range of system, process and policy changes to ensure ongoing compliance with the Holidays Act.
The relevant period that requires remediation payments is from 1 July 2018 to 11 September 2022. The date that MIC became fully compliant with the Act was 12 September 2022.
How much will I receive?
As earnings history and leave patterns are unique to each person, each payment amount will be different.
What deductions or contributions will impact remediation payments?
Remediation payments are treated as ab ‘extra pay’ for tax purposes and therefore subject to the following deductions/contributions:
- PAYE (Tax). This will be at the ‘Lump Sum payment’ rate. (Visit the IRD website for more information on Lump Sum payment. You can also contact Inland Revenue directly on 0800 227 774)
- Student Loan deductions
- If you are a current KiwiSaver member your requested contribution rate will apply. Medical and Injury Centre will also provide the 3% employer contribution for eligible members
What happens if I was overpaid because of an incorrect leave payment?
Under the previous payroll processes and systems, some current and former staff may have been overpaid (i.e. paid too much). Medical and Injury Centre acknowledges that all payments were made and received in good faith and will not be seeking to recover any overpayments made.
I left the organisation and then returned. Will this affect my remediation payment?
Each period of service will be considered individually. If you are entitled to multiple payments, they will be consolidated and paid to you as one single payment.
How do I know if I’m eligible for remediation?
If you are eligible for a payment, we’ll contact you by email or letter using the details we currently hold. We will need specific documentation from you to verify your details and process the payment into your nominated bank account.
If you haven’t heard from us and believe you might be owed payment as part of our Holidays Act remediation, please complete the following form: Holidays Act Payment Form
When will I receive my payment?
Once we have validated your documents, we will advise you of your payment date.
What happens if a former employee who has been impacted is deceased or is otherwise unable to make a claim?
To check on behalf of another person whether a remediation payment is owed, you’ll need to send us an email to holidaysact@nbph.org.nz. We will need confirmation you are authorised to act on behalf of the estate or person as part of the process. This will include identify verification and provide supporting documentation.
I’ve received a very small payment. Why was I paid such a small amount?
We are required by law to ensure you receive any payment owing to you no matter how small the sum.
Have you communicated with the unions?
Yes. We have been in contact with the NZNO union organiser to ensure they are aware of this leave remediation project, our approach and implementation of these planned payments.
Has the remediation process been independently audited?
We have had the process and leave remediation calculation approach reviewed by external audit and legal teams prior to making these payments.
In addition, our independent auditors will complete a further review of the leave remediation payments processed during our year-end financial audit process.
Have current employees who were impacted received their remediation payment?
As part of our process, we are prioritising payments to eligible current employees, before undertaking the same process for former employees.
For more information:
If you have any questions about our Holidays Act remediation project, please contact us at holidaysact@nbph.org.nz
We will be updating these FAQs as we progress.
Leave Types
- Annual holidays: Provides employees with paid time off work for rest and recreation. Under the Holidays Act 2003 employees are entitled to at least 4 weeks paid annual holidays
- Bereavement/tangihanga leave: Paid leave that employees can use if someone close to them dies
- Alternative holiday: This is provided to an employee for working on a public holiday that would otherwise be a normal working day
- Public holiday: Under the Holidays Act 2003, there are 12 public holidays, in addition to annual holidays. An employee is entitled to a public holiday if the holiday falls on a day that the employee would otherwise have worked
- Sick/dependent carer leave: Paid time off work if an employee, their spouse, partner, dependent child or other dependent is sick or injured. Under the Holidays Act 2003 employees are entitled to at least 10 days’ paid sick leave
- Employment relations education leave: Provided to union members to increase their knowledge about employment relations
- Family/domestic violence leave: May be provided to an employee affected by family violence
- DBAPS leave: This is a collective term for family/domestic violence leave, bereavement leave, alternative holiday, public holiday and sick/dependent care leave
Leave Payment Rates
- Ordinary Weekly Pay (OWP): Ordinary Weekly Pay is used to calculate payment for annual holidays and is the amount an employee is normally paid for an ordinary working week
- Ordinary Weekly Pay – 4 week (ORD4): Where it is not possible to calculate ordinary weekly pay due to variable weekly pay, a formula is used to calculate the previous four weeks’ gross earnings
- Average Weekly Earnings (AWE): Average Weekly Earnings are based on an employee’s gross earnings in the 12 months before the end of the last pay period, before an annual holiday is taken, divided by 52
- Relevant Daily Pay (RDP): DBAPS leave payments are calculated using Relevant Daily Pay or Average Daily Pay. Relevant Daily Pay is what an employee would have earned had they worked the relevant day
- Average Daily Pay (ADP): Average Daily Pay is the daily average of an employee’s gross earnings over the past 52 weeks based on the number of days worked. This may be used for DBAPS leave payments, where Relevant Daily Pay cannot be calculated, or an employee’s daily pay varies in the pay period in question
