Holidays Act remediation

1. What are the issues?

The Holidays Act 2003 sets out how payment for leave taken and final pay is to be calculated and paid. It is a complex piece of legislation that can be interpreted in several different ways. The issues relate to entitlements under the Holidays Act 2003 for the calculation of leave, including annual leave, bereavement leave, alternative holiday, public holiday and sick leave payments.

Like many other major organisations in New Zealand, Environment Canterbury has applied an incorrect interpretation to the calculation of holiday pay for some current and former kaimahi.

2. How does it affect Environment Canterbury kaimahi?

Specialists in Payroll undertook a review of how our organisation has calculated leave payments. In line with many other organisations who have identified issues with the Holidays Act 2003 interpretation, they found that we have underpaid some current and former kaimahi their entitlement under the Holidays Act.

We engaged PwC, an independent professional services firm experienced in Holidays Act recalculations to help with the remediation calculations.

We have a legislative requirement to pay everyone appropriately even if the remediation is only a small payment.

3. What is Environment Canterbury doing about this?

Where we have identified inaccuracies in our leave calculations that have resulted in leave and holiday pay underpayments to current and former kaimahi, this will be fixed through a remediation payment (or payments, see Q7).

4. How do I know your recalculations for my remediation payment are correct? 

We are ensuring the recalculations are appropriate by working with PwC, who are experienced in holiday pay remediation processes, to complete the recalculations. Our project team of specialists including Payroll team is supporting this process.

5. What is Environment Canterbury doing to make sure the issues are addressed and aren’t repeated in the future?

MYOB are accounting software specialists and are working with our Payroll team to resolve any alignment issues with the payroll system.

Remediation payments to eligible current and former kaimahi will be made in two stages. The first covers leave payments during the period April 2010 to September 2022. The second stage covers September 2022 to the date when our payroll system is aligned to the Holidays Act.

6. What time period has been included in the calculation of remediation payments?

Kaimahi who were employed by Environment Canterbury after April 2010 may be impacted. Not all kaimahi who worked during this period are affected, as their holiday pay and other leave may have been calculated at the correct, or a higher, rate.

7. Why are you making remediation payments up to September 2022, when the Payroll system isn’t yet aligned to the Holidays Act?

We are paying eligible current and former kaimahi in two stages, because we want to get payments to those who are owed as soon as we can.

The focus of our project team has been to work on the first stage of recalculations and remediation payments. The first payment covers leave payments during the period April 2010 to September 2022. The payroll system will be aligned to the Holidays Act after the first payments have been made.

The second stage of remediation payments will be for September 2022 to the date when the system is aligned to the Holidays Act. There will be further communications about this in 2025.

8. How have you calculated my remediation payment and how much will I get?

The calculation of any remediation payment is complex, and it depends on a number of factors including:

• amount of leave you have taken
• timing of that leave
• the period you were employed at Environment Canterbury
• relevance of any extra allowances
• extent of any relevant daily pay adjustments for leave, including sick leave, bereavement leave, public holidays or alternate day payments
• cashing up of any leave entitlement
• leave taken in advance.

Because of these factors, where there is a remediation payment, this will vary from individual to individual.

9. Are all kaimahi receiving a remediation payment?

The recalculations are extremely complex, and it is likely that if you worked regular hours, and had no change in circumstances, then you are unlikely to receive a remediation payment.

We expect a number of current and former kaimahi will receive a payment once all the recalculations are completed, but not everyone. It depends on the factors listed above.

10. What’s the case if kaimahi were overpaid?

In some situations, kaimahi were overpaid when they took their leave, however Environment Canterbury is not seeking repayment of these overpayments.

11. When will I know if I’m getting a payment and how much?

Our provider who is contacting former employees, NLC Payroll, will start contacting former kaimahi from late January 2025.

12. Will I receive a breakdown of how my payment has been calculated?

Due to the large amount of data required to calculate the payments, we will not be able to provide a detailed breakdown of individual remediation payments. 

13. You already have my details - why do I need to provide them again?

Since leaving employment at Environment Canterbury, your information may have changed, or, due to the length of time since you have left Environment Canterbury employment, we may no longer hold all your data.

14. Will any deductions be made from the payment being owed to me?

KiwiSaver (if you are enrolled) and PAYE tax will be deducted. If you are currently using a SL tax code, student loan maybe deducted (if it meets thresholds). More information can be found on the IRD website.

15. How will the payment be taxed?

PAYE tax will be paid as per tax guidelines from Inland Revenue and will be deducted at the same time the payment is made.

16. What tax code should I use for my payment?

We request that you complete the tax code declaration form IR330, with the tax deduction as per the IRD guidelines.

17. Could this payment take me into a different tax bracket?

Income tax (PAYE) will be deducted from any remediation payments in accordance with IRD guidelines.

We encourage you to contact Inland Revenue if you have any questions about your tax situation. Their website has useful information on the tax treatment of lump sum payments such as arrears payment.

This includes advice about whether any 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 227 774.

18. When will my payment be made?

If you are owed a payment, the payment will be processed within 20 working days of NLC Payroll confirming your identity and additional information.

19. How do I keep myself safe from phishing scams?

Please do not click on any links from text messages and emails. All official correspondence will ask former kaimahi to visit our Environment Canterbury website and follow the instructions listed.

20. How do I claim on behalf of someone who has died or someone for whom I hold power of attorney?

To claim on behalf of someone who has died, you will need to verify your identity and that you are authorised to act on behalf of the deceased kaimahi’s estate so that so that we can validate the information.

To claim on behalf of someone for whom you hold power of attorney, you will need to verify your identity and show evidence that the power of attorney has been activated and that you are that power of attorney.

21. Can I ask you to donate my payment to charity?

We are not processing charity donations. You are welcome to donate your payment to charity after you receive it.

22. I now live overseas. Can my remediation payment be paid into an overseas bank account?

No, we can only make payments into New Zealand bank accounts.

23. Will I get paid interest if there is money owed?

No, interest is not payable on remediation payments.

24. How long will I have the chance to claim my repayment?

The portal will be open from late January 2025 for approximately two years. After that, you can contact NLC Payroll at holidaysact@ecan.govt.nz, or Environment Canterbury Advisory team on 0800ECINFO (0800 324 636).

25. Can I select the payment date?

No, any due payments will be made within 20 working days of NLC confirming your identity and additional information.

26. Who can I get in touch with for more information?

You can get in touch by emailing our team at holidaysact@ecan.govt.nz.