Bunnings has announced it will back pay staff $11 million as part of its efforts to comply with the Holidays Act.

The payment affects 12,235 staff members and comes as a number of other major organisations also make moves to correct the underpayment of staff over years.

All leave payments from April 1 2004 to May 31 2018 have been recalculated to identify team members requiring payment and all money owed will be inflated to current value in line with the Reserve Bank of New Zealand Consumer Price Index.

The median payment to staff is $317.

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Team members were informed today, and the company has already commenced back payments to current staff.

Bunnings NZ general manager Toby Lawrance says Bunnings will ensure team members are paid correctly moving forward until a permanent solution can be implemented.

"Like many other private and government organisations, we have found interpreting and applying the Holiday Act to be a challenge," he said in a statement.

"As a large employer in New Zealand we understand the importance of the trust that exists between our team and the business, particularly in ensuring they are paid correctly."

The Holidays Act saga stretches back a number of years, with a 2016 government report showing more than 24,000 people in the public and private sector had been underpaid between $70 and $1800 each since 2012.

The issues with the act centre around the fact that there are two ways to calculate holiday pay - either on the basis of ordinary weekly pay or an employee's average weekly earnings over the past 12 months.

Employers must pay whatever gives the employee the most money.

But employers who calculate holiday pay based on an employee's contracted hours can get caught out if that person does variable hours or earns a commission or other variable pay.

Due to the continued fallout from this issue, Workplace Relations Minister Iain Lees-Galloway announced in May that the Government would be setting up a task force to review the legislation and how it is applied in the workplace.

Lees-Galloway said the 15-year-old law which sets minimum entitlements for holiday, sick and bereavement pay needed reviewing to ensure it was fit for the modern workforce. It catered to a nine-to-five working day, which was no longer as common.

"It can be very challenging to work out exactly what people's entitlements are when they work what would traditionally be called irregular hours, but which these days are a normal part of working life."