Rotorua Lakes Council current and former staff owed $1 million in unpaid holiday pay

A law change set for next year is aimed at addressing the complexity of the Holidays Act. Photo / Getty

Rotorua's ratepayers will pay a $1 million bill for leave owed to council staff due to nationwide, long-standing issues with the Holidays Act.

In a statement posted to the Rotorua Lakes Council website, a spokesperson said the council had identified payroll-related issues which resulted in staff receiving incorrect payments.

About $1m is owed to about 1140 former and current staff of the council and two of its council-controlled organisations.

It applies to those employed by the council, Rotorua Economic Development (RED) and InfraCore between December 2 2013 to May 3 2021.

"The situation is not unique to Rotorua Lakes Council, RED or InfraCore," the council statement said.

"Other public and private sector organisations have experienced similar issues and are undertaking, or have completed, similar recalculation processes.

The issues related to the payments of, and entitlements to, leave under the Holidays Act 2003, which included annual, bereavement, alternative, public holiday, sick and special leave and "the way these have been interpreted and calculated".

"The Holidays Act legislation is complex with varying rules and calculations for different leave types."

The money owed to council staff also applies to staff employed under previous trading names of the organisations, such as Rotorua Contracting and Castlecorp.

As Rotorua Airport - the third of three council-controlled organisations - ran its own payroll, the airport had its own independent payroll review under way.

"If a recalculation process is required, airport staff will be advised once the review is complete."

The council had undergone an independent review to assess how much money was owed and to whom.

"In late May, all current staff at [the council], RED and InfraCore will be informed as to whether or not they are owed a recalculation payment.

Former employees would receive an email or letter in early June if the council had an address on file.

Workplace Relations and Safety Minister Michael Wood. Photo / File

Those people would need to complete an online form, after which they will be advised whether they were owed a recalculation payment.

People could also visit the council website to contact the council and check if they were due a payment from June 4, the statement said.

Estate managers or those with power of attorney would need to contact the council or organisation the former employee worked for in order to receive any money owed.

The council, RED and InfraCore had investigated the inconsistencies in leave payment since it became aware of the payroll issues, the statement said.

This was to "ensure calculations are accurate for each former and current staff member" it said.

"A comprehensive recalculation and validation process has been undertaken by independent, external payroll specialists Integrity1, to ensure all issues are addressed and all employee entitlements are correctly recalculated."

The statement said the council had "made provisions" to cover the recalculation payments and they would not impact rates for the 2021 / 2022 year due to this.

Future compliance with the Holidays Act was a "major focus" of all three entities and each had worked with Integrity1 " to ensure the systems and processes are as robust as possible".

"Many other organisations have also been dealing with this issue due to the technicalities of the Holidays Act."

Rotorua's $1m bill follows Workplace Relations and Safety Minister Michael Wood's announcement in February that the Government had accepted all of the Holidays Act Taskforce's recommended changes.

Previous minister Iain Lees-Galloway established the taskforce in May 2018 to address challenges and ambiguity in the Holidays Act, following a joint request from Business NZ and the Council of Trade Unions.

The taskforce produced 22 recommendations, including more clarity in determining, calculating and paying leave entitlements so employers and employees would have greater confidence obligations were being met.

In the February announcement, Wood said policy development was under way and legislation was expected to be introduced early next year.

In 2018 it was reported the police had to pay $39 million owed to employees due to the issue, with more expected. Private companies as well as public entities were affected by confusion about how to correctly calculate entitlements.