In a May article on the website the following was presented as the way to get HOLIDAY PAY RIGHT:


  • Employment: Getting holiday pay right


Figuring out the right amount of holiday for your employees and paying them for it correctly can be tricky. We worked with Employment New Zealand to pull together some useful tips to ensure you’ve got it right.

I also notice in the latest version of the IRD Business Tax Update they are referencing this article by stating: ‘Employment New Zealand has free resources to help you comply with the Holidays Act 2003.  Our Labour Inspectorate Payroll Team also engages with businesses to update you on areas of Holidays Act non-compliance.’

In this post I want to discuss if this is a cruel joke or just another example of MBIE in la la land.

Firstly, how can any employer or payroll provider be held to account for getting the Holidays Act right when not even MBIE can (underpaying their employees by $12,000,000+)?  We have an unworkable piece of legislation written by morons, managed by morons and a gutless set of politicians (all of them past and present) that have never been able to do what needs to be done to sort this Act out (start with a green field approach and build an Act that works from the ground up).  Yes, I will get some comments about the present Holidays Act review. But please read the review’s brief and you will see that if it does anything at all it will be just a sticking plaster on the festering open sore that is the Holidays Act 2003. 

Now let’s get back to the article, the focus here is about checking your current payroll system (end to end).  Yes, this is one of the issues that undermines paying an employee correctly, but the legislation is the foundation on which everything else sits and, without being constructed to fit the needs of payroll, it has already and will continue to undermine everything based on this foundation. 

Here are just a few points on why this article authored by MBIE cannot be considered valid or taken as the solution to resolve the issues of compliance with the Holidays Act: 

  • A payroll system cannot fix the law.  Legislation must be designed to provide the framework and rules the system must work within and the outcomes required to be achieved.  The Holidays Act does not provide this to the level where a payroll system can presently deliver compliant outcomes. So, a payroll provider cannot be held to account when the Act does not provide the rules needed to write software that clearly meets those rules and ensure compliance.  The Holidays Act has got substantial gaps with variable hours not being included, vague definitions (what is a regular payment for example) and an inability to average time (when the week or day cannot be defined, time not money). Payroll providers and their payroll systems cannot fix this; it must be driven by the legislation.
  • On a side note, MBIE spent over a million dollars of public money finding their so-called compliant payroll system and their spin doctors have been spinning on how it will meet the compliance issues of the Holidays Act.  How can this be when the Holidays Act review has not even reported back yet? Also, their so-called complaint new payroll system is the same system that has been in the news for Holidays Act underpayments in the millions of dollars (Auckland City Council and Corrections just to start with).  Has MBIE purchased the super-compliant version of this system (LOL). Or will the public have to cover another MBIE budget blowout in the future?   
  • MBIE has never admitted their role in the Holidays Act disaster.  If they had listened to the concerns of the payroll industry before the issues became front-page news, we would be in a far different place than we are now.  For a government department that enforces the Act to state to an employer that they have got it wrong and they must get it right (or face court, fines and public naming and shaming), but then offers no direction on how to get it right, then this demonstrates how this legislation is unworkable. How can an employer be held to account when MBIE cannot provide the leadership and direction needed for an organisation charged with enforcing the Act?

So, in Donald Trump’s famous words MBIE’s article is an example of “fake news” because it implies that if you do these things you will be compliant with the Holidays Act when in fact no one can until the legislation is fixed.  Yes, you should and must check your processes, employment agreements and how your present system has been setup, but MBIE’s article and its claims are rubbish and really do belong in la la land.

NZPPA supporting NZ payroll since 2007!

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