Concerns holiday pay glitch may have affected private sector

A holiday pay glitch which is affecting a large Government department may be more widespread, Finance Minister Bill English says, including employees in the private sector.

Mr English revealed this morning that several large private businesses had approached him with concerns that they may have paid their staff incorrectly, after hearing of problems with holiday pay entitlements within the public sector.

"There may well be a widespread issue in the private sector as well as the public sector around the calculation of holiday pay," he told reporters this morning.

Asked how large the problem could be, Mr English said: "We don't know".

All public sector bosses were now being asked to check their payroll systems.

"We have to make sure, across the public service, people are paid what they are entitled to. That is the first responsibility."

The Ministry of Business, Innovation and Employment (MBIE) is working to fix its payroll after it was revealed that some of its 3000 staff had been paid the wrong amount in holiday entitlements.

The total cost of the miscalculations was not known.

The issue has also affected New Zealand Police, at a cost of $30 million.

The problem stemmed from "very complicated" law changes to holiday entitlements 12 years ago, Mr English said.

"Some people have probably been calculating it wrong ever since the [Holidays] Act came in in 2004."

While the exact details of the problem were not known, it was most likely to affect staff whose hours changed significantly week-to-week.

A working group looked at the matter in 2010 but could not reach agreement on what changes could be made.

Police Minister Judith Collins said New Zealand Police had several factors which complicated its payroll, including a large workforce, high amounts of overtime, and complex contracts.

While the scale of the problem was not significant for the police, it was important for the staff affected and the department was taking it very seriously, she said.