Frequently asked questions

The following information is about the Holidays Act remediation process being undertaken by the University.

What is the Holidays Act 2003?

The Holidays Act 2003 (the Act) is a piece of legislation which sets out leave entitlements and their associated payment details for staff, and which employers must meet.

Why is this remediation necessary?

The Act, and how to interpret it, was a highly publicised matter first identified by Ministry of Business, Innovation and Employment’s (MBIE) with NZ Police. Subsequently MBIE has been investigating other large organisations, as well as those with high numbers of variable hour workers, for compliance. The University was also investigated by the Labour Inspectorate.

What has caused this problem?

The Act is a complex piece of legislation with strict rules and different calculations for different types of leave. The issues relate to the different entitlements under the Act, and how the application of wages and salaries and various allowances and other entitlements have been interpreted and applied by payroll systems. The primary areas that have been identified as being problematic are generally associated with staff who work variable hours, which can make calculating the rate of payments for annual leave, bereavement leave, sick leave, public holidays, alternative holidays, parental leave and family violence leave more complicated than those who work consistent hours.

Staff who consistently work the same daily/weekly hours and receive the same wages or salary each week (who make up the great majority of our staff), are much more likely to have been paid correctly. The review also uncovered system issues and some human error factors.

Who is in scope for remediation?

Unless excluded (below) the University is undertaking these recalculations in respect of all the holiday payments made under the Act since 1 January 2011 (the required start date) for:

All current staff; and
Those who were employed by the University as at 19 November 2018 and have since ceased employment with the University; and
Past staff (as at 19 November 2018) who responded to the University’s request for a recalculation; and
Current and past staff (from 1 January 2011) designated as ‘casual’ and whose work patterns were such that where a public holiday fell during University teaching time the public holiday would have otherwise been a working day for the employee.

The remediation calculation process does not apply to:

All current staff who are employed on a fixed-term employment agreement of less than 12 months (such as tutors) and/or staff employed on casual employment agreements, who each receive holiday pay with each pay; and
All past staff from 1 January 2011 who were employed on a fixed term employment agreement of less than 12 months (such as tutors) and/or staff employed on casual employment agreements, who each receive holiday pay with each pay; and
Past staff who have not responded requesting a recalculation.

Who has completed the recalculations?

The University has worked with an independent payroll consultancy, NLC Payroll, with extensive experience in Act remediation; and PricewaterhouseCoopers (PwC) to assist in the necessary quality assurance to complete the recalculations. We have also been in constant liaison with the Labour Inspectorate who has validated the methodology and recalculation processes.

Why has it taken so long to complete the recalculations?

We acknowledge the process has taken time. Our focus has been to ensure our calculations are as accurate as possible. We have taken all necessary steps to get this right for our staff, while also ensuring future compliance.

As detailed above, the Holidays Act and the compliance issues are extremely complex. We have had to include a total of 73,894 unique staff/role IDs and dealt with over 7.5 million lines of data over a 10 year period. A substantial amount of time has been needed to complete the remediation calculations and have them checked for correctness.

What was the recalculation process that was used?

The recalculation process covers annual leave as well as other holiday pay entitlements such as family violence leave, bereavement leave, alternative days, public holidays and sick leave (FBAPS). The recalculation process compares the actual amount paid to each eligible employee for each day of leave taken with the payment they should have received.

By way of summary:

Annual leave holiday pay is to be paid at the greater of an employee’s ordinary weekly pay or their average weekly earnings for the 52 weeks prior to the annual holiday. The annual leave recalculation identifies if there is a difference between the Actual Paid amount and the greater of Average Weekly Earnings and Ordinary Weekly Pay for each day of annual leave used.
FBAPS leave holiday pay is to be paid at the greater of an employee’s average daily pay or their relevant daily pay. The recalculation identifies if there is a difference between Actual Paid amount and the greater of Average Daily Pay and Relevant Daily Pay for each day of FBAPS leave used.
Retirement leave was not included in past staff remediation calculations.

The recalculation methodology is used by other organisations.

How many staff are entitled to additional holiday pay?

In summary, 89% (65,668) unique staff/role IDs required no further recalculations and were compliant with the Holidays Act 2002, i.e., no monies owing or owed. The remaining 11% resulted in a mixture of overpayments, valued less than $1.5m; and underpayments, under $2.0m.

How will I know if I am entitled to additional holiday pay?

The University will contact all current staff where recalculations identify they are entitled to an additional payment, advising them of their entitlement and the payment details. This advice will include details as to when we expect to be making the payment to you. The University will also continue to follow up with past staff next through into Q1 2023.

When will the payments be made?

Eligible staff currently employed by the University will be the first to be paid under the repayment schedule. This is because their calculations are less complicated than those for past staff, whose final pay entitlement may also need to be corrected as this may have been impacted upon by the recalculation of earlier holiday pay payments. The University made its first payments, less deductions for tax and superannuation, on the pay day Thursday 3 November, 2022 (pay code CHARP).

We have commenced the repayment process of eligible past staff, which is more involved as additional information needs to gathered, through into Q1 2023.

Will I be given the details of the calculation used to determine the amount I am owed?

We have worked with PwC and NLC Payroll, to ensure the calculations are correct, and the Labour Inspectorate has endorsed the recalculation methodology used. The calculation of remediation payments is very complex, involving a large amount of data for each individual staff member, and which works through a step-by-step process which ultimately identifies for each day of annual and FBAPS leave taken the actual amount paid, the entitlement under the Act, and if there is a difference between these amounts.

The University will provide eligible staff with the outcome of these recalculations, and not all the specific details of their recalculation. However, a document detailing an individual staff members calculations can be arranged on request.

Why is my remediation payment different from that of others?

Earnings history and leave patterns are unique so payments have been recalculated individually. Individual circumstances will result in different amounts owing for staff because of differences in allowances and/or salary loadings, hours of work and overtime, when and how much leave has been taken and other related factors.

What do you need from me to make my payment?

If you are current staff we do not require any further information from you. The payment will be made into the same bank account as your normal remuneration is paid into.

If you are past staff and you are entitled to a payment you will receive advance notice of your entitlement. As your details may have changed before making any payment we will contact you seeking confirmation of the bank account you would like the monies deposited in, and other relevant details such as tax and Kiwisaver information.

How will you pay me if my bank account details have changed?

If you are current staff, we will be using the bank account we have on file for you, where you currently receive your remuneration.

If you are past staff the advice about your payment will be sent to you in advance of the payment being made, giving you time to advise us of your bank account details.

How does this payment affect my tax obligations?

The remediation payments have been treated as an ‘extra pay’ for tax purposes. Tax based on the extra emolument rate will be deducted from all remediation payments. Where this means you will pay too much tax in a tax year you should be able to recover this from Inland Revenue after the end of the tax year.

We also encourage you contact relevant organisations such as Inland Revenue for advice about whether your remediation payment affects any arrangements you have with them about your current earnings, benefits, student loans, child support or any other matters.

The Inland Revenue website has useful information on the tax treatment of lump sum payments, such as an arrears payment. ().You can also contact the IRD directly on 0800 775 247 or from overseas +64 4 978 0779.

Will you make superannuation contributions as a part of the payment?

If you are current staff your superannuation deductions and contributions, where appropriate, will be made.

If you are past staff this contribution will only happen if you have provided us with your KiwiSaver information when requesting your recalculation. If we do not have your Kiwisaver details no employee or employer contributions will be made. For past staff no Unisaver and GSF deductions or contributions will be made.

I now live overseas. How will you make international payments?

Please contact the University about your situation.

What if the recalculation reveals that I have been overpaid in respect of my Holidays Act entitlements?

If the recalculation identifies that you have received a material overpayment from the University in respect of your entitlements, then the University may seek to discuss this case with you with a view of seeking a repayment.

Will my remediation payment include interest?

The University is not required to pay any interest or other compensation and will not be making any such payments.

What happens where I’m a current employee and I have had a past role(s)?

The University will first the address remediation calculation for current roles. Then the University will review past roles. For any identified ‘past’ repayments the University will have a different pay code THARP, which can be made using existing details.

Has the issue been resolved so Holidays Act entitlements will be paid correctly in the future?

The University is committed to correcting the payroll system and is continuing to work with its provider to ensure compliance. Additionally, we will do further comparative recalculations to ensure all staff are paid in accordance with the Act. Therefore, some staff may receive a further payment in 2023.

Can past staff still contact the University to check if there are any monies due?

Yes, please email Holidays-Act-Remediation@vuw.ac.nz with your details so we can check and let you know if you have an entitlement.