1 February 2024

Right Honourable Brooke van Velden
Minister for Workplace Relations and Safety
Private Bag 18888
Parliament Buildings
Wellington 6160

Dear Minister

Open Letter – We need your help to resolve the issues with the Holidays Act

My name is David Jenkins, and I am the CEO of the New Zealand Payroll Practitioners Association (NZPPA). We were formed in 2007 to gain recognition for payroll as a profession by developing payroll professionals. We do this through a training framework, payroll certification, and support. We now have over 1,500 members who cover all areas of business where payroll is used, including corporations, companies, not-for-profits, individuals, small businesses, and overseas members. Our members pay over 2,000,000 New Zealand employees.

As you may be aware, the Holidays Act is one of the costliest failures created by previous governments, with well over $2 billion (and counting) in underpayments to employees. A considerable part of the $2 billion relates to the government sector alone, so this should be a great motivator for the new government to want to finally create a workable Holidays Act moving forward.

Since 2018, NZPPA has been involved in various so-called government initiatives through MBIE to create a workable Holidays Act. NZPPA believes all this work has achieved nothing and should be considered a total failure. Throughout the process, payroll questions were not answered, and when feedback was requested, it was rushed and was more about ticking a box to show payroll had been involved. The ongoing delays of a promised bill to be provided in early 2023 show that the MBIE process was a true failure even with five years of work.

I have attached a few of the letters sent to the Minister of the previous government (before they were sacked) regarding our concerns about the process they were undertaking to resolve the issues with the Holidays Act. In short, what was being done did not involve payroll professionals. It was going to create an Act even more complex than we have now and would not help businesses or give employees confidence that they are being paid correctly for leave taken.

There are many issues with the Holidays Act, but just as a starting point, I wanted to highlight the following three areas:

Issues with the Act: It’s overly complex, does not fit business (especially small business) or workplace needs (payroll), is not in plain language and has not been designed to fit with how a payroll system calculates and processes pay for an employee in any work
Issues with payroll providers: We have an unregulated industry that collects one of the largest revenue areas (PAYE) that funds the government while also paying employees for all the work they do. NZPPA is heavily involved in auditing payroll systems with issues from the Holidays Act. Our extensive experience shows that many problems are not from the legislation but from the software It can easily be seen when looking at two different payroll systems running the same Holidays Act calculations but in two different ways with different outcomes. This creates uncertainty and risk for employers and is not acceptable for employees.
Issues with MBIE: This government department is risk-averse and spends more time ducking and diving than fronting up and taking a real leadership role in making the Holidays Act

For a small business (the largest business sector in NZ), trying to challenge a payroll provider that their software is wrong is just impossible. The balance of power is firmly with the payroll provider as they can always hide behind the issues with the Holidays Act.

I need to state that some excellent payroll providers in NZ work alongside employers and have the same problems trying to incorporate the requirements of an Act not written for payroll software into their systems.

Our members regularly voice their concerns and issues with us about how MBIE’s labour inspectors treat them. Their experiences range from feeling fully supported in helping resolve issues to feeling as if the interaction is more of just being downright bullied. How MBIE interacts with business needs to be reviewed.

Just one final point: if some of the tens of millions of taxpayer funds spent by MBIE on consultants and spin doctors had been used to support businesses (especially small businesses), a lot of the issues with the Holidays Act would have been avoided.

I have briefly highlighted some key issues with the Holidays Act, but there are many more. NZPPA is happy to meet with you to share the many years of issues our members have experienced and which NZPPA has seen daily through auditing and providing support across the payroll industry. NZPPA wants to be fully involved in the development of any new Holidays Act so payroll, business, and employees finally can move forward with certainty that leave is being paid correctly.

It is interesting to note that the 1st of April 2024 will be the 20th anniversary of the implementation of this Act. Payroll will not be celebrating this milestone.

Yours sincerely,

David Jenkins
NZPPA Chief Executive Officer
PO Box 2, Bluff 0626
Phone: +64 9 480 6458
Email: [email protected]