MBIE makes the Holidays Act “easy” – NOT!

In a previous post I highlighted that MBIE has released an updated version of their publication Holidays Act 2003: Guidance on annual holidays, bereavement leave, alternative holidays, public holidays and sick leave.  MBIE has now made an announcement about its release and this post will comment on that announcement section by section. NZPPA does not make personal attacks so any mention of the writer has been removed but do keep in mind they do not come from a payroll background.

Updated Holidays Act 2003 guidance now available

MBIE’s statement:

“If you’re struggling to figure out and calculate certain aspects of the Holidays Act 2003 (the Act), new easy-to-use tools on www.employment.govt.nz might be of help.”

NZPPA’s response:

  • Yes, MBIE has finally got something right – the Holidays Act 2003 is a struggle.  But after you read the 91-page resource guide, the 60+ website pages and links and their easy-to-use tools, you will find you still can’t get the Holidays Act right unless you change all staff to work Monday to Friday 8 am to 5 pm, then the Act is perfect and workable!
  • You can forget about any help when you have rotating shifts, or employees that are on variable hours with the inability to define weeks or whether a payment is a regular part of a week.
  • At stated by MBIE it “might be of help”, but in the business world and payroll we want certainty not a vague chance that it might help.  Payroll does not deal in chance, we are focused on paying employees correctly and on time.  MBIE just does not seem to get this!
  • There is nothing in this document that a payroll supplier could use to make a payroll system 100% compliant. In addition, it’s presented as guidance and so there is no authority to force suppliers to make any changes to their software.  Law is the driver for change in a payroll system and until the Act is changed, NZPPA knows that a number of payroll suppliers will not be altering their current systems based on this guidance.  

MBIE’s statement:

“Since July MBIE has been updating the Employment website to provide helpful products on some of the trickiest topics for employers and employees.”

NZPPA’s response:

  • The Holidays Act 2003 was implemented on the 1st April 2004. It is now 2017 and so why is this support only been supplied now?  NZPPA has been asking for support from MBIE for years, but they have not helped.  The damage has already been done.  With MBIE stating employees have been underpaid in regard to the Act by $80 to $1800 a year (going back at least six years), you are talking about an issue in the hundreds of millions to billions of dollars (this is a very rough estimate).  What is criminal is that it has been allowed to happen by a government department. The problems with the Act are not new. Annual holiday calculations have never changed from the first day the Act was introduced and the issues with ADP date from 2011.
  • NZPPA urges the new government (whoever they may be) to take action to make the Act workable and give payroll the real ability to pay employees correctly. Please bring back good old common sense.
  • We also encourage the new government to create an amnesty for employers.  They should be able to come forward without threats being made from MBIE if they have issues with the Act in trying to pay their employees correctly.  Of course, any employer actively trying to underpay employees should be taken to task. NZPPA is fully behind action being taken against those types of employers as they are not part of our membership.
  • MBIE’s only focus is on compliance with an Act that you cannot be compliant with when you have employees that do not fit the Monday to Friday 8 am to 5 pm work pattern.

MBIE’s statement:

“Our new resources will be a great way for people struggling with the Act to get the help they need, without having to look too far to find it.”

NZPPA’s response:

  • How is this a great way for people struggling with the Act to get the help they need?  The documentation is not binding, gives so many vague and different options to take into account and then has a disclaimer which states the following:
  • “This information is guidance only, it is not legally binding, and should not be substituted for legal advice or for the wording of the Holidays Act 2003. MBIE does not accept any responsibility or liability for error of fact, omission, interpretation or opinion that may be present, nor for the consequences of any decisions based on this information.”

 

 

  • So, in plain language, it is not worth the paper it is written on!

 

MBIE’s statement:

”Key topics including termination pay, when to use 8% instead of annual holidays, and the question of when to use ordinary weekly pay versus average weekly earnings are amongst the new resources now available.”

NZPPA’s response:

  • The key topics mentioned are actually not the main issues with the Act.  The issues are: what is a week for an employee when every week or day is different, what payments are regular, and the list goes on with all the hard issues that are not being answered.
  • There are a number of employers not even doing the basics with the Act such as the greater of AWE and OWP to determine the value of annual holidays, and so yes, this may help them in understanding what they should be doing (hopefully).  

MBIE’s statement:

”More products are on the way now that the second part of the Holidays Act 2003: Guidance on annual holidays, bereavement leave, alternative holidays, public holidays and sick leave has been published, including how to calculate payments for working a public holiday, and qualifying for sick or bereavement leave.”

NZPPA’s response:

  • It does not matter how many products are produced by MBIE, products don’t fix the Act and make it workable. The Act creates a situation that every time an employee is paid, additional checks need to done to ensure that the employee is being paid correctly.  This adds to compliance costs for payroll and the business overall and even with additional checks it could still mean that the employee has not been paid correctly. MBIE has made a number of statements about the issues with set-and-forget payroll systems.  This is what we want in a modern payroll system to streamline payroll activities and reduce overall compliance costs.  Paying an employee their leave entitlement should be as easy as paying their wage or salary.  

MBIE’s statement:

“Employees and employers have been asking MBIE for easier to understand guidance on the Act, so it’s great to be able to take that feedback on board to pinpoint the subjects that people find the hardest, and turn them into something that’s easier to digest.”

NZPPA’s response:

  • As stated previously, NZPPA has been asking for help on the Holidays Act for many years and MBIE has not been interested and only became interested when it was a major issue in the news and an embarrassment for the government (for example, the police and MBIE payroll issues).  The Holidays Act is one of the most complex pieces of legislation that impacts on payroll and dumbing down documentation so it is “easier to digest” removes the complex issues and increases the danger in regard to monetary liability the Act causes if it is not understood and applied correctly (if it can ever be).

You can be the judge. Check out the announcement for yourself by using this link:

https://www.employment.govt.nz/about/news-and-updates/updated-holidays-act-2003-guidance-now-available/

NZPPA supporting payroll since 2007!

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