Thousands of Kiwis out of pocket

Around 24,000 workers across NZ are thought to be owed holiday pay

Thousands of workers could be substantially lighter in the pocket because of underpaid holiday entitlements.

Figures released today show about 24,000 workers across New Zealand are affected after labour inspectors investigated dozens of employers for breaches of the Holiday's Act.

The numbers could climb even higher as more reviews are planned but so far affected workers have lost out on anything between $70 and $1800.

Labour Inspectorate general manager George Mason confirmed today 42 employers had been under the microscope for "payroll-related" breaches of the act since 2012.

The move comes after it was revealed this year that the inspectorate's own umbrella department, the Ministry of Business, Innovation and Employment (MBIE), had paid some of its 3000 staff the wrong amount in holiday entitlements.

The issue also affected police, costing $30 million.

It was not immediately clear if those two organisations had been investigated and a ministry spokeswoman said she could not comment on the organisations involved.

Mr Mason said more investigations were planned.

"At risk employers are those who have employees who have fluctuations in the hours they work, or receive additional pay on top of their normal wages, such as for shift work or commission payments," he said.

"The employer needs to make sure leave payment calculations are taking into account the fluctuations in the hours worked or pay received. They cannot just take a 'set and forget' approach to their payroll and expect to be compliant with the Holiday's Act."

The Labour Inspectorate was also working with payroll and professional business service providers.

"Where problems with payroll exist, the Labour Inspectorate has a clear expectation that employers will rectify the issues to ensure future compliance. They must also take appropriate steps to remediate employees for past breaches," Mr Mason said.

"Many employers have worked very constructively with the Labour Inspectorate, their payroll and other professional business service providers to put things right - and in cases where they have been more reluctant, the Labour Inspectorate has taken stronger enforcement action through improvement notices and by lodging action at the Employment Relations Authority," Mr Mason says.

Of the 42 investigations, 20 had been completed and ten employers were sent "improvements notices", six made to do "enforceable undertakings".

One application was lodged with the authority and there were two "voluntary compliance acts".

Arrears were determined in eight cases, affecting about 24,000 workers. The amount of arrears varies significantly for both employers and employees, ranging from an average $70 a worker to about $1800 a worker.

Labour's shadow economic development minister David Clark said the Government needed to investigate the extent of the payroll problem.

"It now appears the payroll issues could be in businesses as big as McDonald's and affect thousands of workers," he said.

"The payroll issue could be tens or hundreds of millions of dollars."

Mr Clark said the problem appeared to have been detected in 2010, and questioned why no action had been taken.

Economic Development Minister Steven Joyce denied this, saying that the problem began earlier, when the Holidays Act was changed in 2004.

He said the changes had complicated holiday pay obligations. At this stage, the Government had no plans to change this legislation.

Mr Joyce said the amount of money owed to employees was relatively small. But the problem needed to be addressed, and several Government agencies were looking into the issue.