The payroll secret that is costing workers $500 a year – CTU

Fresh analysis of documents released this week show that MBIE pushed to keep secret the significant underpayment of up to a third of New Zealand workers under the Holidays Act, costing affected workers up to $500 a year while the issue remained unresolved.

“MBIE advised Ministers 18 months ago to keep secret the extent to which workers had been shortchanged under non-compliance with the Holidays Act, and worse, were advising on future proposals that would actually cut workers’ pay,” CTU secretary Sam Huggard said today.

“On 9 December 2014 (and likely significant earlier), MBIE knew that there was a huge problem with holiday pay calculations.”

“That month they told government that “most employers have made little attempt to comply” with their obligations to pay workers correctly under the Holidays Act.”

The documents show how MBIE initiated discussions where “payroll providers and large employers provided frank feedback on the issues that lead to non-compliance” and these groups were acknowledged on how they “generously gave their time and insights.”

Officials commented in December that: “The Labour Inspectorate has significant intelligence as to the size and location of many of these breaches. However, it has decided to concentrate on reactive work regarding the Holidays Act while the Ministry gets a handle on these issues.”

“This is a derogation of responsibility,” Sam Huggard said.

“MBIE’s decision to keep quiet about the massive non-compliance they uncovered cost New Zealand workers millions of dollars. The Limitation Act 2010 forbids claims older than six years old, so silence in 2014 and 2015 forbids workers from claiming for losses in 2007 and 2008.”

Sam Huggard said the documents also showed how MBIE was advising on changes to the Holidays Act which by their own admission would cut some workers pay.

“The Holidays Act is a good law and it doesn’t need radical change. The Act gives guidance on different options to calculate holiday and sick entitlements. These days New Zealanders work all sorts of hours, and the law provides for this. The questions aren’t complex.”

“MBIE and government are focused on ensuring employers comply with the law in the future. We support this of course, but there needs to be a significantly scaled up operation to uncover underpayment, and get workers paid back.”

“We think that the information released shows that MBIE has failed to safeguard working people’s interests. Many New Zealanders have lost significant sums of money as a result.”

“The CTU has lost confidence in MBIE’s ability to deal with this issue. We call for the Government to fund a tripartite independent enquiry to look into the scope of these issues and recommend a remediation process. This process must be able to assess claims beyond the 6-year period set out in the Limitation Act 2010.”