The government department in charge of chasing employers over holiday pay arrears has yet to pay its own staff - two years after it first agreed to remedy past breaches.

The Ministry for Business, Innovation and Employment (MBIE), which includes the Labour Inspectorate, initially reached an enforceable undertaking in March 2016 over Holidays Act breaches which have been widespread across New Zealand employers.

The issues 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.

Dawn Bowden, general manager financial control at MBIE, said it took actions after the first agreement and then negotiated a second agreement in October 2016 which anticipated that calculations would be completed by June last year.

"However, the complexity of the calculations and ongoing discussions with the Labour Inspectorate led to a mutual agreement to vary the timeframes.

"MBIE is currently working to complete remediation as soon as possible in the first half of 2018."

The issue affects more than 9000 current and former staff and dates back nine years.

MBIE's Labour Inspectorate is taking two employers to court over their failure to comply with the Holidays Act and has agreed deadlines with a further 64 employers.

Despite being part of MBIE the Labour Inspectator says it is not giving any special treatment or allowances to the government department.

Stu Lumsden, Labour Inspectorate national manager said: "[We] can reassure the public with full confidence that MBIE has been treated no differently to any of the 155 other employers audited between July 2012 and September 2017 in relation to Holidays Act non-compliance."

Lumsden said in order to ensure its independence it had sought legal advice to ensure its actions were impartial and appropriate.


While an enforceable undertaking had a deadline, these were not set in stone, he added.

"An enforceable undertaking is a voluntary commitment, so while there are deadlines, these may shift to reflect what arises while an employer seeks to address these issues," he said.

"What is most important during this process is the employers engagement and continued commitment to addressing any non-compliance."

Lumsden said the length of time it gave employers to work through the process and pay arrears varried according to the number and seriousness of the breaches.

"With regards to this stream of work on Holidays Act non-compliance, the Inspectorate is focused on supporting employers to comply through our government-industry work streams, audits and investigations, and education and information efforts.

"The nature of the compliance issues at hand means an enforcement approach, such as referral to the Employment Relations Authority, is only used where an employer has made little to no effort to comply after committing to an enforceable undertaking."

He confirmed MBIE was not one of the employers it was taking to the Employment Relations Court.