Firms urged to seek professional advice over Holiday Act
Businesses should take a hard look at the job of their often low paid and overwhelmed payroll staff, according to a top employment lawyer.
Ernst & Young (EY) Law employment law leader Christie Hall said businesses need to rethink payroll office function with new holiday pay and leave legislation still years away, despite the current Holidays Act review, and enforced remediation payments to underpaid staff piling up.
Getting professional advice was becoming essential given remediation payment obligations could send some small to medium businesses under, she said.
With consultants finding payroll problems throughout the country as companies struggle to interpret laws anchored in 1970s regimented workplace situations against a more flexible 2018 labour environment, Hall said calling in professional help was becoming a necessity.
“This is partly because payroll people haven’t been equipped to do their jobs properly in the current environment.
“Our payroll people today are managing a massive amount of money, managing financial risk, managing an incredibly complex and quite frankly not-fit-for-purpose piece of legislation that doesn’t always accord with the guidance that goes with it.
“They’re managing a regulator (MBIE) which is also on a learning curve. They’re managing pieces of software that often don’t talk to each other. Often time-and-attendance software isn’t linked to the payroll software,” Hall said.
“In many organisations they’re also managing a whole range of different contracting requirements and a whole range of workplace practices. Put all that together and you’re paying someone $30,000 to $40,000 and call them a wages clerk and you wonder why you get a problem.”
A Government taskforce reviewing the
2003 Holidays’ Act is due to update its latest findings any day. The final report is due in June with any new legislation at least two years away.
Meanwhile the Government, through MBIE, Ministry of Business, Innovation and Employment, continues its switch from reactive policing of the Holidays’ Act (responding to complaints) to proactive, and staff remediation bills have ranged from thousands of dollars to around $40 million for the NZ Police.
Hall said bigger remediation costs are potentially looming for other government sectors. But while the taxpayer would pick up the bill for the public sector, small or medium business could go under.
A large number of New Zealand employers were affected by the problems caused by “legislation in 2003 based on a 1981 Act”, Hall said. Most affected were in industries with variable hours, or paying commissions, allowances and other add-ons.
“This is where you need an actively managed payroll. Instead, you get a company which purchases software and thinks they’re getting compliance . . . to my mind business in New Zealand needs to rethink the payroll function — what that job looks like, the size of it, what sort of person you want, what training and support you are going to provide for people in there.”
Hall said new IRD reporting requirements would add another dimension.
“We have two different regulators and two different statutory regimes around tax and the Holidays Act. Just because you are giving information to IRD doesn’t mean MBIE will automatically get it.”