People who were wrongly denied the benefit based on redundancy payments say they are "delighted" Work and Income has reviewed their cases and agreed to back pay them.
It comes after RNZ highlighted the case of an Auckland hotel worker earlier this month, who was told she would have to wait months for a benefit due to her Covid-19 redundancy payout.
Work and Income admitted an error in that case but it raised deeper issues because staff may have been wrongly advising applicants about the impact of redundancy on the benefit waiting time for decades.
RNZ has been inundated with people claiming they were affected, with some cases dating back to the early 1990s.
Today, Work and Income said 244 people had so far come forward to raise concerns about the treatment of redundancy payments.
The first people to contact Work and Income asking for a review have started to hear whether they have successfully challenged the original decisions and if they will receive back payments. These are people who were mostly made redundant in the past six months. It takes longer for older cases to be reviewed.
One man, who lives in Christchurch and was made redundant in January, said he was "delighted" that Work and Income had realised the "error of its ways" after wrongly telling him he wasn't able to get a benefit for a long period due to his payout.
"I was told there was a fairly good-sized queue waiting to have their cases reviewed but I have received an initial back payment to the start of April and there will likely be a bit more to come.
"It's a good result. Thank you so much."
Another man from Palmerston North said his case was reviewed and "I am pleased to share that not only did I receive a payment but it was back-dated to when I first applied during the first week of April".
"I dealt with three different people that really made light work of my case and I must say they were incredibly compassionate and understanding and showed a great deal of professionalism."
He said two people had been in touch with him last Friday, then his branch manager contacted him on Monday.
"Three days later the money was in the bank account."
He said the help "does provide us with hope in a very trying time". He was also grateful to RNZ for highlighting the issue.
Kay Read, group general manager client service delivery, said some of the 244 cases dated back many years and would take time to assess.
"In other more recent cases, if we find any issues we should be able to fix them more quickly."
Staff were reviewing these cases and would be able to provide an overview further down the track.
"We want to reassure all our clients that we work very hard to make the right decisions and ensure people get what they are entitled to," Read said.
"We encourage anyone who thinks we may have made an error to please get in touch with us and we will be able to look into their situation."
Ben Hoffman, a benefit law specialist with Community Law, said "potentially up to tens of thousands of people" could be affected.
Hoffman said the issue was related to the "waiting time" for the benefit and the incorrect inclusion of redundancy payments in this calculation. It was different from the mandatory stand down period. Since 2007, the maximum stand-down had only been one or two weeks
"Within our constitutional arrangements, their [Work and Income] sole function as an executive department of Government is to apply the law correctly. Although isolated issues will always happen. It is grossly unacceptable to misapply the law systemically."
He said most people accepted the decisions they were given because they were "disempowered and had no understanding of what the law" entitled them to. Nor did they understand they could legally challenge decisions.
The law was also very complex and staff not legally trained.
"I have seen this quite a lot; they just presume what they are taught or told to do is correct and do not question it. I can understand that, it is not the fault of the individual, but from a systemic legal perspective, it is not acceptable."
He said if people had concerns they needed to ask Work and Income to investigate in the first instance. They could also seek the help of a Community Law Centre, benefit advocacy group or another lawyer to do this.
The chief executive had the general power to pay compensation (called a gratia payment) where the actions of Work and Income had caused a person unnecessary loss, harm, or suffering, he said.
Work and Income has recommended people call 0800 559 009. Staff would take initial details and someone would then call back for a fuller discussion.