Leave Arrears - Q&A’s
The Government (MBIE) has undertaken leave audits across many businesses in New Zealand as a result of the flaws discovered in the legislation regarding leave entitlements.
The Holidays Act is very complex and regardless of the payroll system used, it can be difficult for employers to accurately calculate leave rates. The impact of this has been felt in all businesses across NZ, including MBIE themselves and you may have heard of the NZ Police case also. The government has recognised the complexity of the Holidays Act and is going to undertake a review to simplify this in March 2019.
Dominion specifically chose a well-respected NZ based payroll system to ensure compliance with the NZ legislation, however it has been found that no NZ payroll system is fully compliant due to the complexity of NZ legislation. After an extensive audit of all employees, past and present, we have found that some of our employees have been affected.
The issues relate to entitlements under the Holidays Act 2003, which will be remediated back from October 2010 and relate to the rate of payment for statutory holidays, alternative holidays, annual, sick and bereavement leave.
The leave arrears back pay calculations are now finalized and we are getting in contact with all affected current employees as well as attempting to contact past employees at their last known address. We acknowledge that this is a disappointing situation which we, alongside other New Zealand businesses, are facing and we have worked to put robust measures in place to comply with the Holidays Act moving forward.
We are contacting all impacted employees, but for further information or if you believe you may have been affected please complete the online claim form immediately or contact us on 09-580 9499, between the hours of 8:00am – 4:00pm, Monday to Friday. Please be aware our team are unable to tell you the amount you will be paid over the phone as your eligibility to a leave arrears payment must be verified through the claim process.
Please note that our offices will be closed Friday, 21 December 2018 and will reopen Monday, 7 January 2019
Key Issues - Who/How much/Payment timings
What are the payroll issues?
The issues relate to entitlements under the Holidays Act 2003 and primarily impacts employees who work variable and unpredictable work patterns or work above their contracted hours. In some but not all cases, these employees have not received correct payments and leave arrears back pay may be due. Leave arrears calculations date back to October 2010.
The Holidays Act legislation is complex with varying rules and calculations for different leave types. This issue is not isolated to Dominion and is a wide issue affecting many employers across NZ.
Who is impacted?
The issue relates to a number of past and current employees, employed between October 2010 to June 2017.
Affected employees (past and present) will receive a letter from us with information about their leave arrears payment and how they can have it paid. Not all employees who worked during this period are affected, as their holiday pay was calculated at the correct or higher rate.
For past employees, we are using the last known contact details we had for them when they left the business. If you believe you are eligible and have not been contacted, please complete the online claim form or call us on the number provided on this page.
How much will my payment be?
Everyone’s earnings history and leave patterns are unique and, as such individual calculations for each team member have been completed. As a result, each payment amount is unique and Dominion will write to each of the affected employees and advise of the amount owed. If you believe you are eligible and have not been contacted, please complete the online claim form or call us on the number provided on this page.
When will I receive the money owed in my bank account?
The letter you receive will provide details of when your payment will be made. Your leave arrears payment will be made into the bank account that your salary or wages are paid into.
Past employees will be paid as soon as possible upon receipt of a completed claim form and necessary documentation. Depending on claim volumes it may take several weeks to process your claim.
Why has it taken so long to make these payments?
We appreciate that it has taken time to determine and process the leave arrears payments. We have had 7 years of records to evaluate and our focus has been on ensuring the leave arrears payment calculations are accurate for each team member. We engaged Price Waterhouse Coopers to perform the calculation and other third parties to verify these, as well as working closely with a MBIE Labour Inspectorate.
Documentation
Will I receive a payslip once my leave arrears payment has been deposited into my bank account?
Yes, current employees will receive a payslip available on TimeFiler once the payment is made, consistent with how all payslips are delivered.
Past employees will have a payslip emailed or mailed (as advised by you) to their nominated email or mailing address upon payment of their leave arrears payment.
Will I receive a detailed breakdown of how my leave arrears payment has been calculated?
The calculation of leave arrears payments is complex involving a large amount of data, and as such detailed calculation break downs will not be provided with the letter detailing the amount of your leave arrears payment. However, if you wish to obtain a detailed statement of your calculation this can certainly be arranged on request.
What documents do you require?
Current employees do not need to provide any documentation as we already have your current bank account, KiwiSaver and taxation details.
Past employees will need to lodge a claim form, which can be lodged immediately online. The following documentation is required to be uploaded to complete your claim:
- Proof of identity: copy of birth certificate, passport, certificate of citizenship, immigration NZ visa, drivers license or 18+ card, please note if your identity document has two sides both sides must be provided;
- Tax code and IRD number: a signed Tax Code Declaration Form (IR330); and
- if contributing to KiwiSaver a signed IRD KiwiSaver Deduction Form (KS2)
The claim form and lodging of these documents can be completed electronically via the online claim form. Otherwise a claim can be lodged by email by downloading the PDF form, printing it, completing it and scanning or photographing the completed form along with the above supporting documents.
Do current employees need to complete a claim form?
No, current employees do not need to complete a claim form we already have all your current details on file. We will automatically process your leave arrears payment into the bank account that your ordinary salary or wage is deposited to.
Past or deceased employees
Why do past employees need to complete a claim form and provide additional documentation?
To ensure you receive the money owed to you we must obtain proof of identify. Information relating to your KiwiSaver fund, taxation and bank account details are needed to be able to process your payment.
If I’m a past team member what happens after I lodge my claim form?
Your documentation will be reviewed and verified by our Payroll team. Once we have confirmed your claim and documentation is in order we will process your leave arrears payment to your nominated back account as soon as possible. A payslip detailing the payment made to you as well as any KiwiSaver contributions will be provided via email or mail.
What happens if I’m a past team member and I have changed address, how will you contact me?
Please make a claim either online, via email or call us on the number provided on this page for assistance.
What happens if I’m seeking payment on behalf of a deceased team member or a team member for whom I hold power of attorney?
To ensure we pay the money owed to the appropriate people we are required to verify your identity and confirm that you are authorised to act on behalf of the estate or team member.
If you believe you may be entitled to a leave arrears payment on behalf of an estate or a team member whom which you hold power of attorney, please call us so we can work with you to confirm your eligibility to a leave arrears payment and process the payment for you.
Tax, KiwiSaver and other benefit implications
How will my leave arrears payment affect my tax and any other benefits?
Current employees will have PAYE deducted at the appropriate PAYE rate for the FY19 tax year.
Past employees will have PAYE deducted in accordance with the tax code you provide to us as declared in your signed Tax Code Declaration Form (IR330).
For completeness, Dominion will calculate PAYE based on the legislation, any final tax liability is the responsibility of the individual, care should be taken in choosing the appropriate tax code. For further information; please visit IRD website; www.ird.govt.nz or call IRD on 0800 775 247, alternatively, seek independent tax advice.
We encourage you to consider how your leave arrears payment may impact child support, benefits or other such matters you may receive.
If you have any concerns about this, please call us on the number provided on this page.
What happens to my KiwiSaver contributions?
Current employees will have KiwiSaver contributions on their leave arrears payment based on your contribution set up already provided to us.
Past employees are required to provide their KiwiSaver details and nominate their contribution percentage to Dominion and this will be deducted from your leave arrears payments and paid to your KiwiSaver fund. Past employees that are not KiwiSaver members will not be automatically enrolled.
Should no KiwiSaver nomination be made, no contributions will be made and the payment made to you will not have KiwiSaver contributions deducted.
Will Dominion make company KiwiSaver contributions on top of my contribution?
Yes, should you make a contribution from your leave arrears payment, Dominion will also contribute 3% to your KiwiSaver fund. Dominion’s contribution is an added benefit above your leave arrears payment and will only be paid for those employees that make a contribution to KiwiSaver.
Example: an employee elects to have 3% of their payment contributed to KiwiSaver, Dominion will contribute 3% (less ESCT) to the employees’ KiwiSaver.
Future reassurance
What steps have been taken to ensure my future holiday pay is correct?
We appreciate the implications of this issue and understand the importance of ensuring it does not happen again. Future compliance with the Holidays Act has been a major focus of the work we have completed. We have worked closely with the MBIE Labour Inspectorate to ensure our systems and processes are as robust as possible to comply with the Holidays Act.
We have hired additional resources and introduced additional control processes and checks of holiday pay to ensure all leave calculations are paid correctly moving forward.
The NZ legislative Holidays Act is very complex and difficult to interpret. The Government have indicated that a review of the Act is imminent, and we will be actively participating in this review.
Who can I contact for further information?
Please call the Dominion Payroll team on 09-580 9499, Monday to Friday, between 8:00am – 4:00pm.
Please note that our offices will be closed Friday, 21 December 2018 and will reopen Monday, 7 January 2019