According to a recent RFI announcement MBIE is looking for a new payroll solution. This is after being found to be non-compliant with the requirements of the Holidays Act 2003 early in 2016. The enforcers of the Holidays Act were found to be wanting in how they pay their own staff!
Since last year there has been little in the news from MBIE on whether it has resolved the payroll issues, but with this RFI it seems not to be the case. It had been stated earlier this year that they were to pay outstanding monies to their staff in June of this year, so how is that going? Will the public get to know how much this mistake has cost the taxpayer? MBIE is usually happy to publicise employers’ shortfalls in regard to outstanding monies found to be payable from issues with the Holidays Act. Front up MBIE!
On a daily basis NZPPA is helping our members with Holidays Act issues. It is the number one issue impacting on the work that payroll practitioners do, as the Act is overly complex and unworkable with multiple calculations that just don’t work in many environments. The Act won’t change as there is no will to do so and MBIE’s lack of support with the catchphrase “as per the Act” does not provide any sort of protection for employers or payroll. One day it could be right and the next not. It does not matter how many vague publications, working groups or other activities MBIE provides (without putting any real money behind it). Unless it is backed up, it does not provide any form of direction, security or ongoing resolution in sorting out the real issues with the Holidays Act for employers or payroll.
The government needs to step up, take leadership and provide an Act that is as simple as paying an employee’s wage or salary. The present Act has never met the reasons we changed from the old Holidays Act 1981 which were as follows:
- Reduce compliance costs through providing holiday entitlements that were easier to understand.
- Ensure that there was consistency in entitlements between different types of employment.
- Ensure that the minimum entitlements met the public policy objectives set out above.
So, if MBIE can’t get the Holidays Act right, but they expect every other employer to get it right or face serious consequences, here are a few questions directed at them on their own payroll:
- Has MBIE issued an enforceable undertaking to itself, threatening and harassing its own payroll to get the requirements of the Act correct like many of our NZPPA members and employers have been?
- Is MBIE payroll having its own labour inspectors giving flip-flop directives that don’t relate to the Act or just showing they don’t understand how payroll actually functions in a business?
- How does MBIE payroll prove it has fixed the issues when its own labour inspectors won’t tell employers what they have to do to get it right, even though they state they have it wrong?
We had a good laugh when we saw this requirement from the MBIE RFI:
‘MBIE is seeking a payroll solution that ensures MBIE:
- is fully compliant with the Holidays Act 2003 and other relevant legislation.’
NZPPA does not believe there is such a thing as a fully compliant payroll system in regard to the Holidays Act. The Act is written in a way that the employer can be challenged on any aspect based on the flavour of the month, MBIE’s and labour inspectors’ changing views (three phone calls to their call centre to get three different answers on the same question), and the differing opinions of the legal profession. Also, please include NZPPA in the mix as we also have a view on how the Act is applied to payroll.
So, how does MBIE define compliance or assess that a payroll system is fully compliant with the Holidays Act and other relevant legislation? Please tell us so we are all on the same page. I hope it is not based on MBIE’s checklist of assessing your payroll system, which is available from their website as that is misleading and is more of a dummies guide to payroll. One of the reasons we have problems in payroll is because of all the dummies making decisions on payroll that are from other departments (e.g. HR and Finance) or have not involved payroll in payroll decision-making.
Over five years ago NZPPA approached the newly formed MBIE and asked for help in updating the Holidays Act 2003 Payroll Specification (which had been previously developed with DOL). The intention was so payroll developers could design payroll systems based on a specification that ensured compliance with the Act, but MBIE declined. IRD provides an updated specification to payroll developers every year and this is a very effective way to help payroll suppliers keep up to date and compliant (as much as possible). Since the public media storm last year, MBIE is now trying lots of activity that is superficial and still does not provide what we need in payroll. It is more about covering MBIE’s and the government’s back to minimise bad press on this issue, especially in an election year.
If MBIE finds a payroll system that is fully compliant with the Holidays Act should we cry “Eureka” as the holy grail of payroll systems has finally been found? And then should we drop all other payroll suppliers and their systems and flock to the only fully compliant payroll system in New Zealand?
The short answer is “No”. Any payroll solution MBIE selects will be so politically motivated it will most likely be selected by non-payroll people. The selection team will consist of communication, engagement and risk officers that have never seen a payroll system or know how it functions. Here comes another NOVOPAY!
NZPPA supporting payroll since 2007!