The Ministry of Education is using debt collectors to retrieve money overpaid to teachers in error by the Novopay system.
The school payroll system, launched six months ago, has been plagued by problems, with teachers underpaid, overpaid or not paid at all.
Now, the Government - which has launched a ministerial inquiry and a technical audit into sorting out the debacle - have confirmed they are using debt collectors to get overpaid cash back from teachers.
Education union, the New Zealand Educational Institute (NZEI), described the move as "extremely heavy-handed''.
A ministry spokesman said: "We always try to find an appropriate balance between an individual's ability to pay and the requirement to collect public money that has been paid in error as quickly as possible.
"The ability to pay would include whether the money is still available in their bank account and that the individual could reasonably expect that it was an overpayment that should be returned.
"The majority of school employees who have received an overpayment undertake to repay it.
"Novopay has a specialist debt recovery unit which deals with the recovery of overpayments.''
The processes used are the same as they were with the previous payroll provider, the ministry says, which involves writing to employees who have been overpaid and arranging repayment of the money.
The ministry say they work with individuals who face debt recovery as closely as possible to "reach a mutually satisfactory arrangement'' for repayments.
NZEI immediate past president Ian Leckie believes the Government needs to readdress its priorities, when many staff members are still being underpaid. "With so many people out there being underpaid, and not enough people working on that job, now the ministry have people chasing up overpayments, it's a completely misplaced priority,'' he said.
"It's a preposterous way to do it, especially when employees continue to work and adjustments can be made to future wages as part of the recovery process.''
Fed-up teachers protested outside the electorate offices of 35 National MPs last week.
A special Novopay Backlog Clearance Unit opened yesterday to help clear the backlog of issues relating to previous Novopay pay periods.
Mr Leckie, principle of Tahatai Coast Primary in Papamoa, said his school has paid more than $45,000 in advance money to its staff because they've been underpaid by Novopay.
"Perhaps every school owed money should send the debt collectors around to the ministry,'' Mr Leckie said.