What are the issues relating to the Holidays Act and holiday/leave payments?
KiwiRail, along with many other large and medium sized organisations, has faced challenges in correctly calculating leave entitlements for employees under the Holidays Act 2003.
The issues concern what should be counted when calculating payments for bereavement leave, alternative days, public holidays and sick days, along with annual leave.
Over time, these issues have resulted in some staff receiving incorrect payments, with the specific areas that require remediation dating back to 2011.
Who is affected by this issue?
The issue affects some individuals who are, or were previously, employed by KiwiRail from April 2011.
Not all employees who worked during this period are affected, as there will be instances where holiday pay was calculated correctly or at a higher rate.
We are currently working through the first stage of the process, which is to identify both past and present employees who have been affected.
Contractors or Temps who invoice KiwiRail directly are not affected by this.
How do I know if I’m affected?
Due to variations in earnings history and leave patterns for our business, every case has been assessed individually; therefore, each payment amount will be different, and there will be cases where no payment is owed.
Once the calculations are finalised and we are ready to make payments, we will contact affected current employees, and advise them of the amount they will get and the date they can expect this to be paid.
We will also contact affected former employees at their last known address to request additional information, such as tax codes, which is required before any payment can be made. Some former employees have already been in touch with us so we already have this information for them
If you are a past employee of KiwiRail and you believe you are eligible, you can register your interest by emailing us at HolidaysAct@kiwirail.co.nz.
What period will be covered by the payment?
The first phase of remediation calculations to be completed will cover 1 April 2011 through to 16 February 2019.
There are further phases that will cover the remaining timeframe.
Why has it taken so long to make these payments?
We appreciate that communication first went out in late 2018, it is a complex issue and has taken some time for us to investigate and recalculate remediation payments.
With over 8,000 current and former employees who need to be included as part of this process, we want to ensure that the payments are correct for the period they cover the first time around, and that there is no need for further recalculations.
We are working hard to ensure our calculations deliver correct payments.
What are the main reasons as to why the Holidays Act payments were not calculated correctly?
Complexities generally arise in two areas of the Holidays Act:
Problems can arise with the method used to calculate the payment owing to an employee, as there are different ways of calculating what should be paid for a specific day/week of leave or holidays.
Ordinary weekly pay, average weekly earnings, relevant daily pay and average daily pay are the calculations that are used depending on the type of leave that is taken. If the incorrect method of calculation is used it can result in an overpayment or an underpayment to an employee.
Calculations are made difficult as the Act refers to annual holidays being paid in weeks, while other leave types (bereavement leave, alternative holidays, public holidays and sick leave) are paid in days.
Employers will often accrue, calculate and pay holidays and leave taken in hours to allow smaller quantities of time off to be taken by an employee (e.g. half day = 4 hours).
Calculation errors can also happen when employees receive additional allowances, work regular overtime or their hours vary day-to-day or week-to-week.
What are the next steps in the Holidays Act Remediation Process?
We have been working through a review of our current payroll system, alongside considerations of the complexity of our workforce, to determine the best approach for any potential changes.
As our first phase covered a specific period - from 1 April 2011 through to 16 February 2019 - there will be future calculations once we have implemented the needed system and process changes. We will ensure regular communications are sent out regarding progress of the Holidays Act Remediation Project.
Who do I contact for further information?
If you have any further questions or concerns, please feel free to contact the project team at HolidaysAct@kiwirail.co.nz.