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What is Holidays Act compliance and remediation?

Like many public and private organisations across New Zealand, Te Whatu Ora - Capital, Coast and Hutt Valley and the Wairarapa hospitals are impacted by Holidays Act 2003 compliance issues.

The Holidays Act 2003 covers pay and entitlements for employees in New Zealand about all types of leave and public holidays. While it’s easy to follow for those working standard hours, the Act has proved more complex for employees on shift work, variable days and hours, or with flexible work patterns.

This has resulted in widespread non-compliance – essentially, employers have unintentionally been underpaying or overpaying staff what they’re entitled to.

Since this came to light in 2015, it has affected a wide range of private and public organisations, including all hospitals.

The three Wellington district hospitals – Wairarapa, Hutt Valley and Capital and Coast – have identified payroll-related issues and where the DHBs are not compliant. This has resulted in some staff receiving incorrect payments over time.

The issues relate to entitlements under the Holidays Act 2003. The specific areas requiring remediation date back to 1 May 2010. The issues are mostly related to the payment of statutory holidays, and annual, sick and bereavement leave etc.

In late 2016, then DHB chief executives agreed to establish a national process to respond to concerns raised by the Council of Trade Unions (CTU), around levels of compliance of hospital payroll systems with the Holidays Act 2003.

As well as development of a national process to manage Holidays Act Review and Remediation work, much work has been done to develop and agree a national interpretation of the Act for all hopspitals to adhere to.

Are other organisations and other hospitals affected?

Yes. A number of both public and private sector employers in New Zealand are also impacted. Like us they are working hard to resolve this issue.

We are in communication with Te Whatu Ora and other hospitals working through similar issues to ensure that we use National guidance and take a consistent approach to becoming more compliant.

What does this mean for you?

Right now you do not need to do anything. We will keep our current staff up to date. However, it should be noted that not everyone is affected. Holiday pay was calculated and paid correctly for many staff members.

Once we have rectified the system and any other areas in which we are non-compliant, we will look at Holiday pay calculations back to 1 May 2010, for both current and former staff.

What is the agreed solution between hospitals and the unions?

The agreed solution between all hospitals and unions is to proactively make remediation payments to current and former employees to adjust for incorrect calculations going back to May 2010, and for future payments to be calculated and paid correctly.

What is the process and project status?

Each of our hospitals will need to carry out three key stages to manage this issue, these are:

  1. Review - An independent external audit review process which identified the key areas of Holidays Act non-compliance was completed in August 2020. Ernst and Young completed our audit and produced Findings Reports for each of the hospitals in our district.
  2. Rectification – This stage is currently underway and addresses areas of non-compliance found in the Review Stage. Non-compliance has come about from a complex mix of process, policy, practice and payroll system issues. This will looks at what changes need to be made to ensure all of our system/s, policies and processes are compliant – and that we pay our employees correctly going forward.
  3. Remediation– Planning is currently underway. This stage is about calculating and paying anything that is owed to current and former employees arising from any identified areas of non-compliance, back as far as 1 May 2010. It should be noted that some employees may have been underpaid – and some may not. Not everyone will be owed money. The project team will be in touch when we know what this means for individuals.

We are currently working out how big the issue is, how many staff across the three district hospitals may be affected and what the timeframes will be for the remediation process.

What about former employees?

Former staff will be able to register their contact details with hospitals. This will ensure there is up-to-date contact information for former staff. This will also make it easier for us to contact them if they are impacted.

We will also be making every effort to contact any former staff members who may be impacted.

Note: The review of payments will go back as far as 1 May 2010.

Current employees do not need to do anything. You will receive information both here and directly. This will notify you of progress and about anything you need to do.

When will I know if I have money owed to me and how much?

We are still working through which employees have been affected and whether any payments may be due. We will notify you as soon as this information becomes available.

Will I have to pay money back?

If there have been overpayments, it is unlikely that action will be taken to reclaim those funds. The emphasis is on paying staff what they are owed. Looking into this will also help us to identify situations where we may be overpaying staff – if we are, we will correct this.

More information

We will provide updates to this page as we move through the project phases, so please come back to see how we’re getting on.

If you have any questions email our 3DHB Holidays Act Project team.