As you may be aware, over the last few years an issue arose regarding New Zealand businesses and the application of the Holidays Act 2003. It came to light when big organisations like the New Zealand Police, large retailers and government departments (including the Ministry of Business, Innovation and Employment itself) identified issues.
It is now known that this is an issue which has impacted most employers in New Zealand and is due to the complexity of the legislation. In response, the Government set up a Tripartite Task Force to review the Holidays Act with a view to simplifying it.
For several years we have been reviewing whether we have been applying the correct interpretation of the Holidays Act 2003, with the support of external independent advisors from KPMG and PWC, as well as the Labour Inspectors from the Ministry of Business, Innovation and Employment (MBIE).
As a result of this review, we have identified that our interpretation of some leave payment calculations has previously been non-compliant with the Act. The general areas of non-compliance identified relate to the following:
Who has been impacted?
Employees that may be affected are those who were / are employed by WSP New Zealand Limited (prior to 14 October 2019 was Opus International Consultants Limited) between August 2011 and October 2019. We have reviewed all payments processed back to 2011 and we have identified employees who are owed a remediation payment.
The most common reasons for error involve people with variable pay and/or variable hours of work i.e. allowances, regular changes in the number of hours worked etc. Most employees who have a pay that does not change each fortnight are, in the most part, not impacted.
In some situations, employees taking leave may have been paid more than they were entitled to. We will not be seeking any repayment from employees for any leave we have overpaid.
What action have we taken?
When we were made aware of the issue, we voluntarily commenced our own investigation and analysis. We subsequently agreed a plan of action with MBIE (called an Enforceable Undertaking).
We have reviewed all payments processed back to 17 August 2011 and we have identified employees (both current and past) who are owed a remediation payment.
We have worked closely with the Labour Inspector (MBIE), PWC and KPMG and our Payroll provider - Frontier Software Ltd, to ensure our systems and processes moving forward are robust and to ensure we comply with the Holidays Act.
The Labour Inspector has signed off our remediation methodology, process and recalculations.
Through this extensive piece of work, we are confident that the remediation calculations and system/process improvements fully remedies all issues.
Through remediation we are now able to ensure that our people, historically and currently, receive the minimum entitlements when they have taken or take annual holidays or other leave types.
How will I know if I have been impacted?
WSP has conducted a holiday pay remediation audit and has developed a list of employees (both current and past) who have been affected. We are attempting to make contact directly with all past employees who we have identified as being impacted.
Where possible we have contacted past employees using the details held on our HR records via email and text message, and in some cases by post.
If you have not heard from us but think you may be due a payment, please get in touch. You can contact us by emailing [email protected]. You will be required to provide us with updated information and remediation payments will be processed as soon as possible after your completed information has been received.
Frequently Asked Questions
Who has been involved in the remediation process?
An internal WSP team has worked closely with PWC, KPMG, Frontier Software Ltd and a Labour Inspector from the Ministry of Business, Innovation and Employment (MBIE). The team have documented all issues, remediation steps and methodology. This has all been reviewed and our re-calculations have been approved by the Labour Inspector assigned to WSP to complete this work.
If my pay was always the same, will I be impacted?
Generally, employees who have worked a standard number of hours and days per week (i.e. no variability in their pay) will not be affected.
The most common reasons for error involve people with variable pay and/or variable hours of work (i.e. allowances, regular changes in the number of hours worked etc). Most employees who had a pay that did not change each fortnight will in the most part be unaffected.
How far back do recalculations go?
We are required to go back six years from the date of a claim or six years from the date we became aware of the Holidays Act issues up to the point of a full system and process compliance. We commenced discussions with MBIE in 2017, therefore, calculations will range from 17 August 2011 to 31 October 2019 or from when an employee commenced employment with WSP whichever is the earliest date.
What will I need to do?
All past employees will need to provide updated information about bank account, tax codes, student loan, superannuation etc by completing the form below and returning it to [email protected]. Once received we will process your remediation payment in the next available pay run.
Download Holiday Act Remediation Form for Former Employee
You will also need to provide a copy of your driver license or passport so that we can ensure we are making payment to the correct person and to minimise the risk of fraudulent activity.
How much will I be paid?
Earnings history and leave patterns are unique, so each employee has been assessed individually and each payment amount will be different.
Please note: Some Employees with receive at letter indicating they are owed a very small payment amount and may question why we have issued the letter. Under the Holidays Act, we are obligated to pass on all monies owing, no matter how small the value is (i.e. some values may be as small as $0.06).
Will I receive interest on my remediation payment?
Interest is not paid on remediation payments.
Several factors have been considered in deciding whether it was appropriate for WSP to pay an additional amount in the form of interest or compensation. These factors included the following:
- It would not be fiscally responsible for WSP to pay interest or compensation.
WSP are not legally obliged to pay interest or compensation in this situation.
- Where possible, when reviewing historical data, assumptions have been made in favour of the employee or the most generous method of calculation has been used.
Has anyone been overpaid?
Yes, we have identified some employees who have been overpaid. However, WSP has decided there will be no action to seek recovery of overpayments.
How will this payment be taxed?
All remediation payments will be taxed as a lump sum payment as per Inland Revenue guidelines. The payment is taxed at the current tax rate and reported to Inland Revenue as earnings for the current tax year.
We will be asking all past employees to confirm which tax rate they want to be applied to their remediation payment. (along with confirmation of KiwiSaver deduction rates)
The Inland Revenue website has useful information on the tax treatment of lump sum payments such as an arrears payment. A fact sheet is available at IR1046 Getting lump sum payments.
We encourage you to contact the relevant organisation such as Inland Revenue for advice about whether your remediation payment affects any agreement you have with them about your current earnings, benefits, child support or any other matters.
You can also contact the IRD directly on 0800 775 247.
Can the payment be taxed as earnings in a previous tax year?
No - the guidance from Inland Revenue is clear on this. Backdated remedial payments are taxed at the current tax rates and reported to Inland Revenue as income in the current tax year. We are not able to record your payment against another tax year or years.
What will happen with Superannuation payments?
KiwiSaver contributions (i.e. employee and employer where applicable) will be deducted as per the details you provide on the remediation form, from any remediation payments as per normal payroll processing.
If you were in the Government Superannuation Scheme (GSF) or WSP Downer super (previously known as Works Superannuation), your super payments have not been affected by the Holidays Act calculations and there will be no impact to your remediation payment and no further contributions are required.
How do I make a claim on behalf of a deceased team member or a team member for whom I hold power of attorney?
Please email us at [email protected] with details of the deceased employee and we can provide further details regarding what is required.
What if I my contact details have changed since I left WSP?
If you have updated your contact details or moved house since leaving WSP please feel free to provide us with your updated contact details by emailing us at [email protected]. This will ensure we can contact you easily when we are ready to send a communication to you.
We will only collect and use your personal information for the purposes of settling any payment under the Holidays Act remediation.
Where can I read more about this issue?
Ministry of Business, Innovation and Employment (MBIE) -
Holiday Legislation Review: more information
Who do I contact for further information?
If you have any further questions, please feel free to contact us at [email protected].