Our processes and calculations for payroll remediation

This page sets out our main processes, recalculations and data corrections for the Holidays Act 2003 payroll remediation covering the period from 21 August 2008 to 27 June 2018.

Data corrections

The issues we identified during the discovery phase of the project required us to make data corrections in a number of areas before we could use the stand-alone calculator to recalculate and compare leave payments.

If you have been affected, we’ll provide you with a letter outlining which of the processes described in the table below you have been affected by.

Contact us for more information

Once you have received your letter and you have more questions, contact us at PayrollReview@mbie.govt.nz for more details.

Process
Description

Main recalculation of leave payments

(RECL)

We’ve recalculated the payment for every instance of leave across the remediation period to ensure that at least minimum entitlements under the Holidays Act 2003 have been received by employees.

We’ve recalculated annual holidays to ensure that at least the higher of Ordinary Weekly Pay and Average Weekly Earnings has been paid.

We’ve recalculated other leave types – Bereavement, Alternative Holidays, Public Holidays and Sick leave - to ensure Relevant Daily Pay has been paid. Where it has not been possible or practicable to determine Relevant Daily Pay, we have used Average Daily Pay in the remediation calculations.

In addition, all work records have been reviewed for casual employees to determine whether a public holiday was an otherwise working day. Where it was an otherwise working day Relevant Daily Pay or Average Daily Pay have been determined and paid as outlined above.

Allowance codes

(ABUK)

We identified issues with the use of some allowance codes and their inclusion in, or exclusion from, the gross earnings used for the calculation of leave payments. We’ve performed data corrections to ensure the historic recalculation of leave is correct. Payroll system configuration changes and new allowance codes have remedied the issues going forward.

Alternative holiday balances

(ALTB)

A number of systems and methods have been used to manage alternative holidays before and after our Ministry was created, so we undertook a review to ensure the Holidays Act 2003 was applied consistently to all employees. Alternative holiday balances will be corrected and available in Payroll Kiosk (only for current employees internally) early next year. Affected employees will be notified separately.

Immigration New Zealand Border Shift Employees – earlier remediation

(BORP)

We reviewed the previous remediation undertaken for Bereavement, Alternative Holiday, Public Holiday and Sick leave for Immigration NZ border shift employees and assigned the lump sum payments to the actual days the payment fell due. This allowed us to recalculate all leave types based on corrected data across the remediation period from 21 August 2008 to 27 June 2018.

Broken workflows

(BROK)

In our first year of operation, there were a number of issues which impacted leave requests. This resulted in a number of leave requests being entered into the system but not being actioned or fully completed. Affected employees will receive an adjustment to their leave balance and/or payment if required.

Cash-up of annual holidays

(CASH)

We completed a review of annual holiday cash-ups across the remediation period to check and correct the exclusion of first week cash-ups and inclusion of subsequent weeks’ cash-ups into gross earnings.

Casual employees holiday pay

(CASU)

We reviewed Holiday Pay for casual employees to ensure the correct amount had been received.

Contra payments
(CTRA)

We undertook data correction to proceed based on the correct data.

Data checking

(CLAS)

We identified incidences where retrospective changes had not processed correctly. We completed a review of these records so that all remediation checks could proceed based on the correct data.

Domestic Leave – Immigration New Zealand Border Shift Employees

(RDPD)

We identified an issue in the ACTOR rostering system which resulted in incorrect payments for Domestic Leave for INZ Border shift employees for the period 5 December 2013 to 26 July 2015. We have undertaken a review of this period and performed recalculations for affected employees.

Employee Type

(DIVR, DIVR2, DIVR3)

For employees affected by the Employee Type issue (notified in June 2018), we have recalculated pay and leave for the historical periods where the Employee Type should have applied. Historical leave entitlement earned and leave taken will be adjusted based on the correct hours of work to ensure the correct leave entitlement balance is available.

Overseas Employees

(OSEA)

We identified a configuration error relating to historical overseas allowances in the payroll system which affected the gross earnings used for the calculation of all leave types. Gross earnings have been corrected accordingly.

Public Holidays

(PHOL)

We have completed a detailed review of employees that have worked on public holidays, and identified and adjusted where other paid leave types have been recorded (eg. annual holidays and sick leave).

Standby on Public Holidays

(STND)

We have reviewed instances of Standby on Public Holidays to ensure the correct payments have been made and Alternative Holidays credited where required.

Termination Pays

(TERM)

We have reviewed all termination pays to ensure all requirements of the Holidays Act 2003 have been met for terminating employees.

Unpaid Lines

(UWPL)

We performed data corrections of unpaid lines identified within the payroll data.

Worked Hours

(WOHR)

We have validated worked hours for each employee (where they are not a casual employee or on a roster) against the work profile held within the payroll system to ensure that when leave is taken the leave payments are correct.

More detail on how we have done the calculations

How a “week” is defined

The remediation calculations have been performed with a week being in line with the pay period, which is Thursday to Wednesday.

How a “day” is defined

A day is defined as your work profile hours for the particular instance of leave. For example, if you had a day of sick leave on a Thursday and your work profile for a Thursday is six hours then that is what constitutes a day for the calculation of the Relevant Daily Pay or Average Daily Pay for that instance of sick leave.

Calculating annual holidays where the period of annual holidays crosses pay periods

Section 21(2)(b) of the Holidays Act 2003 requires that annual holiday pay must be at the rate that is based on the greater of:

(i) the employee’s ordinary weekly pay at the beginning of the annual holiday or
(ii) the employee’s average weekly earnings for the 12 months immediately before the end of the last pay period before the annual holiday.

Where a block of annual holidays crosses pay periods, the remediation calculations check that the rate at the start of the block of leave is used for the entire block of annual holiday. If the block of annual holidays is interrupted by other leave type/s, the rate at the start of the block is used for all annual holidays on either side of the other leave type.

Where a block of annual holidays is made up of more than one leave request, the rate at the start of the block continues across consecutive days of annual holidays.

Treatment of payments above entitlements and underpayments

The remediation calculations compare what was paid with what should have been paid for each instance of leave. Both payments above entitlements and underpayments have been identified through the remediation process. The treatment of these in the remediation calculations are as follows:

  • Payments above entitlements – these are excluded from the 52 weeks gross earnings for subsequent annual holiday payment calculations. Any recovery of these payments above entitlements will be determined on a case-by-case basis but in the vast majority of cases we won’t be seeking recovery.
  • Underpayments – these are included in the 52 weeks gross earnings for subsequent annual holiday payment calculations. The underpayments will be paid to employees and former employees.
  • Gross earnings – The gross earnings figures used for the remediation leave recalculations don't include amounts which are genuine or mistaken payments in excess of contractual or statutory entitlements. By including underpayments and excluding genuine or mistaken payments above entitlements in the 52 weeks gross earnings, the Holidays Act 2003 remediation calculations are based on corrected gross earnings figures that align with what was due to the employee under the Employment Agreement.

Once you’ve received your letter, if you require further information or have any concerns about payments above entitlements and underpayments in your remediation calculations please contact PayrollReview@mbie.govt.nz.

Parental leave affected annual leave

Any annual leave taken that has been affected by a period of parental leave, as defined in the Parental Leave and Employment Protection Act 1987, has been recalculated using the higher of Ordinary Weekly Pay or Average Weekly Earnings.

Anniversary dates

The anniversary dates used to determine employees entitlements through the remediation are the anniversary dates held within the current payroll system.