HOLIDAY PAY: WHY DO BUSINESSES GET IT WRONG? WELL MYOB GOT THIS WRONG TO START WITH!

One of the issues with the Holidays Act 2003 is the payroll systems we are using and it does not help when a payroll supplier makes statements that are just wrong in relation to the Holidays Act.

This just causes even more confusion with an unworkable Act and creates further risk to employers and the payroll practitioners having to use these payroll systems.

NZPPA is not stating the MYOB payroll systems are wrong, just that the following article is substandard and should not have been published.

In a recent “MYOB InPractice” dated the 27 November 2017 (forwarded to NZPPA) it included the following article titled:

Holiday Pay – why do businesses get it wrong?

In the following section it states:

Annual Holiday (Leave) Pay

Is normally calculated using the greater of:

  • Ordinary Weekly Pay – the average of the gross earning four weeks prior to the leave
  • Average Weekly Earnings – the average of the gross earnings 52 weeks prior to the leave

And is counted in weeks, not days or hours.

NZPPA: THIS IS WRONG AND TOTALLY MISLEADING!

The default by law for Ordinary Weekly Pay (OWP) is:

Section 8(1): means the amount of pay that the employee receives under his or her employment agreement for an ordinary working week.

The 4-week average is an alternative calculation only when the week cannot be defined, if MYOB is using the 4-week average as the default, then yes their payroll system is wrong.

In another section of this article it covers the following:

Bereavement Leave, Alternative Holiday, Public Holiday & Sick leave (BAPS)

Under the definition for Average Daily Pay (ADP) it states the following:

  • ADP – The gross earnings 52 weeks prior to the leave, divided by the number of days worked in the same period.

NZPPA: THIS IS WRONG AND TOTALLY MISLEADING!

ADP is not just divided by the days worked. Section 9(2) states the following:

where—

a: is the employee’s gross earnings for the 52 calendar weeks before the end of the pay period immediately before the calculation is made

b: is the number of whole or part days during which the employee earned those gross earnings, including any day on which the employee was on a paid holiday or paid leave; but excluding any other day on which the employee did not actually work.

Again, if the MYOB payroll system is only dividing by the number of days worked as the default, then yes their payroll system is wrong.

To view the article for yourself go here: https://www.myob.com/nz/blog/holiday-pay-why-do-businesses-get-it-wrong/

If you are a client of this payroll supplier, I would ask for clarification on what has been stated in this article.  I hope you receive a good response.

Hopefully, MYOB will remove the article or at the very least update it.

NZPPA supporting payroll since 2007!

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