A list of private companies investigated by the Labour Inspectorate for payroll breaches has been released - it includes Compass Group (the new caterer for Dunedin Hospital), a Dunedin boys' school, and Silver Fern Farms.
A spokesperson for Spotless acknowledged there had been 'short-term discrepancies' in payments. Photo: 123RF
The Labour Inspectorate has created a temporary team to carry out targeted investigations for employees who may not have been paid their full entitlements under the Holidays Act.
Government officials have estimated up to 760,000 people could have been underpaid over several years across the public and private sector, with a total cost that could top $2 billion.
The Ministry of Employment, Innovation and Employment (MBIE) and the police have identified underpayments due to non-compliance with the Holidays Act, and government ministers have said the private sector was also likely to be affected.
Documents released to RNZ News under the Official Information Act showed 13 investigations were completed between 1 January 2015 and 17 March this year.
MBIE said the nature of breaches focused on the "miscalculation of annual leave and BAPS (bereavement leave, alternative holiday, public holiday and sick leave) entitlements and/or payments, missing components of individual employment agreements, and the failure to keep adequate records."
Various enforcement notices have been issued, with MBIE withholding the details of one active case.
Silver Fern Farms was in mediation at the Employment Relations Authority over the Improvement Notice it had been issued with, because it still believed it was compliant.
Other companies and organisations on the list included Compass Group, which has been in the news after it took over the catering contract for Dunedin Hospital.
Compass said the Improvement Notice related to an issue over one employee which it said had since "been fully investigated and resolved with the employee".
The company said, like many other employers in New Zealand, it was conducting a payroll system review to ensure full compliance.
Compass said it was still working with the Labour Inspectorate in relation to the wider review process and therefore "compliance pending" remained the status.
It said it had engaged an independent specialist accounting firm to conduct the review.
The board of John McGlashan School, and other companies in various different sectors around the country (House of Hygiene, Birdhurst Limited, S Prasad Limited, Counties Ready Mix Limited), were also listed as not having reached compliance, as of 17 March.
The Labour Inspectorate is part of MBIE and the ministry itself is on the list; it has been issued with an "Enforceable Undertaking", a voluntary commitment to address its payroll breaches.
MBIE said the Labour Inspectorate had other means available if companies failed to remedy the breaches, including seeking further penalties in the ERA.
The documents also showed two district health boards reported payroll breaches to the Ministry of Health in April last year.
The Nelson-Marlborough DHB reported problems affecting 200 staff, and South Canterbury reported problems affecting 49 staff.
The government has repeatedly said it would not change the Holidays Act because to do so would reduce entitlements for employees, and it would continue to work with payroll providers and employers to make sure people were getting paid properly.
Michael Woodhouse said he was still open to a possible law change. Photo: RNZ / Alexander Robertson
Official documents showed Michael Woodhouse, as Minister for Employment and Workplace Relations, was pushing for a review of the Holidays Act last year, with a view to a possible law change, but that was abandoned.
Cabinet briefing notes said "high compliance costs for businesses and the potential underpayment for employees" provided "strong incentives" to find a workable change to the law.
The papers outlined a timetable including the introduction of a bill in December last year.
The proposal reached Cabinet in May last year but went no further.
When asked why the review and possible law change were dumped, Mr Woodhouse said he was not able to establish "the degree to which the simplification process that might be possible, would result, could result, in reductions in entitlements."
Mr Woodhouse said he was still open to a possible law change.
"There's no active work but I still invite anybody who is able to help me come up with a more straightforward framework, that doesn't reduce entitlements, if we can land in that sweet spot, I'd be prepared to consider it."
DHBs still don't know cost of problem
Meanwhile, one of the two district health boards involved in the payroll breaches said it still did not know the scale and cost of the problem - despite being aware of it for more than a year.
In April 2015, Ministry of Health acting national director Michael Hundleby wrote to the two DHB chief executives alerting them to potential miscalculations of leave payments.
"An immediate priority is to determine the financial impact of any potential breaches," Mr Hundleby wrote.
He asked the chief executives to provide the ministry with an initial assessment of potential payroll breaches, the potential scale, and whether the costs could be met from within baseline funding.
In its response, Nelson-Marlborough DHB said it had not been paying the alternate day for an estimated 200 employees working or on-call on a public holiday.
It said they were mainly nursing staff within the emergency departments, intensive care units and theatre.
But, in a statement on Monday, Nelson-Marlborough DHB chief executive Chris Fleming told his staff he could not "yet confirm how many employees are potentially affected".
He said the DHB found out about the holiday pay and leave issues last year, and had "now started a thorough review of our payroll processes to clarify the issues".
"The review will determine the issues, the extent of these across our organisation and develop a solution. This work is in the initial phase," he said.
In the statement, he said it was likely "the issues mostly affect employees who have fluctuations in the hours they work, or receive additional pay on top of their normal wages, such as for shift work".
The South Canterbury DHB was yet to respond to questions, but last year it told the Ministry of Health the way it recorded an employee's work patterns and remuneration was not compliant.
