Millions owed to workers - Stolen holiday leave needs repaying now
Unite Union wants answers from the government as to why hundreds of thousands of workers are still waiting to have the annual leave stolen from them in the past restored.
It is three years since Unite first wrote to major employers in the fast food industry telling them that they were miscalculating annual leave for their staff.
It is two years since MBIE, the government agency responsible, admitted being in error in the payment of their own staff.
Last week we discovered that the firm Xero, who provide accounting software for a third of all New Zealand small businesses as well as online payroll services, have sent us and other employers their method for calculating annual leave and it means employers will get many workers annual leave just plain wrong. This firm may be de facto the largest payroll provider in the country with hundreds of thousands of clients.
In the past, most companies were making two main "mistakes" in their calculations. The first was that companies were not doing the “higher of” calculation for employees who worked irregular hours. The law was quite specific that for this category of worker the company had to pay annual leave at the “higher of” their average weekly pay over the year or their last four weeks average pay. For workers whose hours (or just pay) varied week to week, if they took leave after a busy period they were missing out.
The second main problem was that workers were not receiving 4 weeks leave as required by law. Workers had accumulated leave recorded in hours, usually as a percentage of their hours worked through the year. For any worker who increased their average hours over a year, this meant they could not take a full four-weeks holiday because the number of hours accumulated would always be less than their current weekly hours when divided by four.
Take this example – not unusual. A worker starts the year on 10 hours a week, finishes the year on 20 hours a week and works an average of 15 hours a week for the year. The worker asks for one week’s annual leave. What should they get paid?
At the time this worker takes the leave they have accumulated 60 hours leave owing. The worker wants to take a week’s leave. A week is currently 20 hours, which means this worker can’t take 4 weeks leave as required by law – they have only accumulated enough leave hours for three weeks’ leave. This means that this worker would inevitably miss a week's leave they were entitled to. Employers seemed to always accumulate and allocate leave in hours without doing a conversion into actual weeks of leave which meant this was an inevitable result.
There were additional problems as well, like not all allowances being included, public holidays not be paid at the correct rate, or when they should be (along with alternative days being given – or, often, not).
At the moment, the two biggest employers we deal with are telling us that they are being given advice by MBIE that seems contradictory.
McDonald's have said that MBIE has not asked them to do anything about fixing their very restrictive policy for lieu day entitlements. Until 2015 it was a requirement for their workers to work three out of three of the relevant days to earn an alternative holiday. Since mid-2015 it was amended to three out of five in the collective agreement but that is probably unlawful as well.
Restaurant Brands, on the other hand, which operated a 3/4 same day formula tell us that they have been told to fix this using an 8 out of 12 formula before they recalculate annual leave remediation. But it still isn’t clear whether overpayments for annual leave can be used to offset underpayments and we haven’t had a commitment to making corrections going back six years from when we first raised the problem rather than six years from now.
Burger King tells us that they don't have to do anything and MBIE haven't been in contact. We know they are not compliant.
We need direction from government to fix this.
We need payroll providers being told they need MBIE sign off on their systems or they will be legally liable.
We need all employers of 20 or more people to run an audit through an approved auditor of their payroll systems.
Unless there is clear direction from the government, employers like Burger King will just shrug their shoulders and claim to be compliant when they are not.
We believe hundreds of millions of dollars have been cheated from workers and should be paid back now.
No major employer should be allowed off the hook.
The government appears to be missing in action. It is time to step up and lay down some rules.
Blog by Mike Treen with some more background on annual leave https://thedailyblog.co.nz/2018/03/25/billions-owed-in-leave-why-are-we-wating/