If we notify you that you're entitled to a payment, you need to log into our remediation payment portal to receive it.Getting a Holiday Act remediation payment for former employees
We have found that we underpaid employees under the Holidays Act 2003.
If you were employed by Inland Revenue (IR) at any time on or after 18 August 2011, you may be entitled to a remediation payment for incorrectly calculated holidays and leave.
We are contacting former IR staff from 27 June 2022 who are entitled to a payment. We will contact you first by text, then by email and finally by post.
The Holidays Act and why employees were underpaid
The Holidays Act 2003 sets out how payment for leave and final pay is to be calculated and paid.
The Holidays Act is a complex piece of legislation which can be interpreted in several different ways. This means many organisations, including the NZ Police and the Ministry of Business, Innovation and Employment (MBIE) (which regulates the Holidays Act), have miscalculated holiday pay.
How far back we'll correct payments
We have agreed with the Labour Inspectorate to correct payments back to mid-August 2011. we are required to go back 6 years from the date of non-compliance. Calculations will start from the beginning of the second pay period in August 2011 (18 August 2011).
Payroll issues being addressed by the remediation payments
The issues relate to entitlements under the Holidays Act 2003, mainly to the payment of:
- annual holidays
- bereavement leave
- alternative holidays
- public holidays
- sick leave
- domestic violence leave.
Checking the leave payment recalculations
We have contracted a third-party supplier who has worked with us for several years and has performed similar work with other agencies. They have built a tool to recalculate the payment for every instance of leave across the remediation period to ensure that employees have received at least minimum entitlements under the Holidays Act 2003.
Recalculating annual leave
Recalculating other leave types
We’ve recalculated other leave types – bereavement, alternative holidays, public holidays, sick leave and domestic violence leave - to ensure relevant daily pay has been paid. Where it has not been possible or practical to work out relevant daily pay, we have used average daily pay in the remediation calculations.
Any annual leave cash-ups will have the first week from gross earnings.
We’ve recalculated annual leave payments after a period of parental leave to ensure that they are paid at the average weekly earnings rate. Following an Inland Revenue policy change on 20 December 2013, we have ensured that annual leave is paid at the higher of ordinary weekly pay and average weekly earnings.
Overtime and standby
We’ve reviewed the regularity of payments such as overtime and standby. If they are counted as regular at the time leave is taken, then they are included in the calculations for annual, bereavement, alternative holidays, public holidays, sick leave and domestic violence leave.
We've reviewed casual employee records to work out if a public holiday would have been a working day for them. If it was a working day, we've calculated and paid the right daily pay or average daily pay.
We have engaged with our unions about the remediation payments.
Entitlement to remediation payments
Holiday payment errors typically affect employees who have received payments over and above their normal salary. These can include:
- some allowances
- regular overtime
- employees who have changed their hours of work.
Remediation payment amounts
The remediation calculations compare what was paid with what should have been paid for each instance of leave. The amount that people will receive will vary depending on the circumstances for each individual employee, for example their hours worked or payments made during the remediation period.
A significant number of employees will not receive a payment. Half of those people entitled to a payment will receive less than $100.
Why are we paying such small amounts?
We are making all payments even if you are due 1 cent. We have a legislative obligation to pay everyone correctly even if it is only a small payment.
Some people have been overpaid. We’ve decided not to recover these overpayments. This is in line with other government agencies. These overpayments are not included in the 52 weeks gross earnings for subsequent annual holiday calculations.
Underpayments are included in the 52 weeks gross earnings for subsequent annual holiday payment calculations. The underpayments will be paid to current and former employees.
Once you’ve received your letter, please email us if you require further information or have any concerns about overpayments and underpayments in your remediation calculations.
Impact on tax and benefits
The remediation payments will be treated as an ‘extra pay’ for tax purposes. We encourage you to contact us or other relevant organisations for advice about whether your remediation payment affects any agreement you have about:
- agreement you have with them about your current earnings,
- child support
- working for families
- any other matters.
Our website has useful information on the tax treatment of lump sum payments such as an arrears payment.
You can also contact us directly.
KiwiSaver and superannuation contribution deductions
KiwiSaver deductions and contributions will be calculated as part of the remediation payment.
Other superannuation contributions won't be calculated or deducted due to the way in which they're calculated.
Student loan deductions
Student loan repayments will be calculated as part of the remediation payment.