Serious side-effects in ‘Novopay nightmare’
The teachers’ pay scandal has had knock-on effects which have hit many hard.
THE FLAWED Novopay system has spawned a number of serious side-effects that have changed tax brackets, misdirected ACC levies and forced teachers to prove their identity, among others.
The Ministry of Education has now apologised for the much-maligned system and the ‘‘frustration’’ and ‘‘anxiety’’ it has created.
Working alongside schools, the Sunday Star-Times has investigated thousands of complaints regarding the $29 million system and has discovered a raft of alarming side-effects to the widely reported non-payments and over-payments.
Bulk payments, to make up for weeks of not being paid, are pushing teachers into new tax brackets, leaving them out of pocket and unable to recoup money until filing a tax return at the end of the financial year.
Child support payments are not reaching some recipients.
Payments are not being made to ACC, superannuation funds, KiwiSaver and student loans, despite being taken out of wages and listed on payslips.
Teachers are losing thousands from being struck down the 12-step pay grade by a system ‘‘fix’’ and have to go to great lengths to prove their identity to have their pay readjusted.
Schools are facing upcoming audits with accounts so depleted they have been forced to put Novopay down as a debtor.
Post Primary Teachers’ Association (PPTA) president Robin Duff said Novopay problems had seeped into other government departments.
At a recent meeting with the Ministry of Education, ministry staff revealed problems ‘‘ have links to the IRD and other groups like ACC’’, Duff said.
‘‘Some people are having items shown on their payslips which are not getting through to the right account.’’
Education Ministry group manager Rebecca Elvy apologised on behalf of the ministry for the problems teachers have been put through.
She said the ministry was working closely with the Ministry of Social Devel-
It is not going to be an immediate solution. Minister Steven Joyce
opment, the Inland Revenue Department and other agencies to help those affected by Novopay.
She advised staff experiencing problems to contact the ministry.
‘‘We can explain the situation to MSD and provide any evidential documentation needed,’’ she said.
The IRD has also stepped in to ensure the information it receives from employers regarding gross pay, PAYE, student loans and KiwiSaver deductions are correct.
An IRD spokesman said Novopay was affecting employers and individuals.
‘‘ It is important that any delays to customers receiving their entitlements or meeting their obligations are minimal and their information or records held by Inland Revenue are updated as quickly as possible,’’ he said.
‘‘We offer assistance to any employer or employee who believes that compliance with their tax obligations has been disrupted so they are not disadvantaged.’’
The Office of the Auditor-General is putting steps in place to ensure schools are not disadvantaged by Novopay errors in the upcoming audits.
Minister Steven Joyce was brought in last week to tackle the Novopay disaster.
He held numerous meetings with Talent2, the ministry and management teams last week, and those meetings will continue this week.
He will soon visit schools in Auckland and Wellington to meet with administration staff on the front line.
‘‘It is not going to be an immediate solution.
‘‘We are working as quickly as we can,’’ Joyce said.
Labour acting education spokesman Chris Hipkins said the ‘‘Novopay nightmare’’ was going to continue for some time.
‘‘At the end of the financial year, thousands, possibly tens of thousands, of people are going to have a heck of a job getting information together to do their tax returns,’’ he said.
‘‘For the lucky ones, they’ll get a tax refund. The unlucky ones could find themselves getting socked with a big tax bill.’’
Tax When a staff member is not paid for months, Novopay puts through a bulk payment comprising all owed wages, as a single transaction.
However, the system treats that bulk payment as a regular fortnightly payment and readjusts the level of tax, pushing it over one and in some cases, two, tax brackets.
This means the staff member is paid significantly less than had they been paid on the fortnightly basis. To recoup the money, they must file a tax return with Inland Revenue at the end of the financial year.
This will be particularly difficult for many teachers because their Novopay payslips are riddled with errors.
A Ashburton College principal Grant McMillan has experienced significant and problems from the outset of Novopay, the most ludicrous just before Christmas when Novopay took $ 40,000 directly out of the school bank account to pay a number of teachers who had never worked at the college. ‘‘As far as I am concerned, [Novopay] have stolen $40,000 out of our bank account,’’ he said. And because those teachers were paid a bulk sum, it pushed them to a higher tax bracket so they didn’t receive as much money as they should have. McMillan wants his school’s money back but asked how those teachers would be able to pay back a combined $ 40,000, when in reality, they received less than that because of paying more tax.
A Part-time teacher Kate Syme was underpaid by at least $120 each pay period for two months between August and October. To make matters worse, she was not sent a single payslip. Hours of work and countless emails secured her a bulk payment and four payslips. ‘‘I got about four payslips in a row and they were absolutely bizarre,’’ she said. Two were blank and the others showed ‘‘ complete gobbledygook. I cannot understand why this is allowed to go on’’, Syme said.
Benefits
Another unforeseen side-effect of bulk payments and incorrect payments is staff losing benefits.
Some part-time staff are paid a government benefit. However, they are entitled to benefits only if they are earning under a certain financial threshold. A bulk payment pushes them over the threshold, into a higher tax bracket and out of the benefit payment.
Payment schemes A serious glitch in the Novopay system is the non-payment of ACC levies, child support, KiwiSaver, superannuation and student loans.
The Sunday Star- Times understands that these deductions are made from wages and shown on payslips. However, the payment does not end up with the correct recipient.
A Beaconsfield School principal Wayne Facer, from his home in Timaru, has coordinated a database of hundreds of principals throughout the country who are experiencing Novopay problems.
‘‘ I’ve heard of teachers who have had their benefits cut,’’ he said. ‘‘There is one who had child support payments stopped. You can imagine how his ex-wife took that.’’
A One teacher, who wanted to remain anonymous, said she noticed ‘‘ huge’’ amounts of student loan being incorrectly taken out of her pay.
She called Inland Revenue who sent her an account of her student loan repayments. ‘‘ Guess what, they haven’t received it,’’ she said.
‘‘Inland Revenue say I have paid less than half what has been taken out of my pay.’’
Pay grades Teachers have a 12- step pay grade, ranging from about $36,000 at level 1 through to about $71,000 at level 12.
A Novopay ‘‘fix’’ for weeks of non-payment has been to create a new identity for teachers in the system.
However, this fix wipes out the pay grade, taking the teacher back to level 1.
In order to re-establish their correct pay, teachers must have copies of their qualifications and a letter of endorsement from their school signed by a Justice of the Peace and verified by the Ministry of Education. Only then will Novopay readjust their pay.