Holidays Act compliance – information for Southern DHB staff and former staff

The Holidays Act 2003 is the fundamental piece of legislation outlining leave entitlements for employees. It applies to Southern DHB and all our employees. The Act sets out the minimum entitlements to holidays and leave for full-time, part-time, permanent, temporary and casual workers provided they are engaged under employment agreements.

In recent years it has become apparent that there is a high level of non-compliance with the Act. While the Act is generally effective for a standard, five day, 40 hour week, the Act can be difficult to apply to more diverse working arrangements and complex remuneration packages. This has resulted in widespread non-compliance – essentially employers may be unintentionally underpaying or overpaying employees. These issues are particularly evident for us as we have employees working a range of shifts, with variable days and hours, and flexible work patterns.

The issues relate to entitlements under the Holidays Act 2003, primarily to the entitlement and payment of: • annual leave • bereavement leave • alternative leave • statutory leave • sick leave.

More than 100,000 health workers will have their holiday pay calculations reviewed starting from 1 May 2010 with an undertaking that any shortfall will be refunded.

District Health Boards (DHBs), the New Zealand Blood Service (NZBS), the New Zealand Council of Trade Unions (CTU) health unions, and the Labour Inspectorate have worked together to develop an agreed national audit process.

We are reviewing the payroll records for every employee and ex-employee commencing with the pay period beginning 1 May 2010. At this stage is it unclear exactly how many employees may be impacted, however, it is likely to be a large number.

Each DHB is carrying out a review and rectification process of their end-to-end payroll system and a subsequent remediation process. The agreed solution between all DHBs and unions is to review and then rectify any shortfall in payment to any current and former employees for pay periods beginning 1 May 2010. The rectification process is undertaken to correct the processes and ensure that all future payments are calculated and paid correctly.

District Health Boards (DHBs), the New Zealand Blood Service (NZBS), the New Zealand Council of Trade Unions (CTU) health unions, and the Labour Inspectorate have collectively signed a Memorandum of Understanding which sets out the ‘Framework for Local DHB Holidays Act Review’. The Unions are represented on the Southern DHB Steering Group and Compliance Team  which are the two groups set up to oversee the process.

Timeline

There are 3 key phases.

1. Review

This phase was completed in January 2021. We have external auditors testing our payroll system against the Baseline Interpretation agreed by the DHBs and Unions to identify breaches and estimating the liability.

2. Rectification & Recalculation

This involves resolving any identified issues of non-compliance with our Holidays Act 2003 entitlements and applying processes to ensure future entitlements are compliant.  During this phase we will identify all current and former employees who are affected by non-compliance. We estimate this may take approximately a year.

3. Remediation

This involves calculating and paying any amounts owing to current and former employees. There will be a national process for former DHB employees (e.g. those who worked for Southern DHB at any time since 1 May 2010) to register. The amounts due to existing employees can be processed through our usual processes. We estimate this process will take about three months to complete.

Past employees of all DHBs will be able to register their contact details on a national website specifically set up to enable former employees to provide up-to-date contact information in a central database.

We will be able to contact past employees through the contact information they provide on the national website. A link to this website will be available here soon.

Note: The payroll review commences from the pay period 1 May 2010 for payments made to all employees (past and present).

Current Southern DHB employees should not register on the national registration website.

We will be in touch with all past and present employees during the remediation phase. This is likely to be towards the end of 2021. We will contact our present employees first and then past employees.

We won’t be asking for any repayments. We want to determine where we have been making overpayments and ensure those are corrected and do not continue into the future.

We will update information on our intranet and also on the Southern Health website and the national website as we move through the three phases of the process.

To the extent there are underpayments, the payments to you will be taxed in accordance with the Income Tax Act based on your tax code. Therefore, it is possible your total earnings may be higher which may increase your overall tax rate and have implications for family support allowances, student loans, tax payments, superannuation etc.

As a current employee, if we identify that you have been underpaid, we will share with you a statement that shows the calculations once we have completed the review assessment. We have your bank account details in our payroll system and the payments are likely to be processed through our payroll system.

This is a complex process involving policy, practice and system configuration factors. It’s absolutely vital that we get it right and complete it thoroughly takes time. In addition, we are part of the national process which is intended to achieve consistency across DHBs.

No – you don’t need to do anything at present.

We’ll keep you updated as we progress through review, rectification and remediation alongside the Unions, our auditors and the Labour Inspectorate.

Please email our Compliance Team: holidaysact@southerndhb.govt.nz