Stolen Holiday Pay must be paid back – the Government must act

Stolen Holiday Pay must be paid back – the Government must act

By Mike Treen, National Director, Unite Union

(Reprinted from The Daily Blog)

Bunnings have confessed to not paying annual leave correctly and agreed to pay back staff $11 million dollars going back 14 years.

This is an important win for First Union who represent workers at Bunnings and all workers in New Zealand.

It is probable that several million workers are owed money. But the vast majority of them are unlikely to see any of the money deliberately stolen from them by major corporates and payroll providers.

It seems the government has only directly engaged with the 100 biggest employers to demand they fix the problem. There is no mechanism to force compliance on the rest of the employers and payroll providers to ensure that the settlement process is carried through.

Wage theft is an international problem



The vast majority of medium-sized employers used a relatively small number of payroll providers. At the very least, the payroll providers should be forced to alert the clients of their legal responsibility and that they need to take steps to fix the problem. If they don’t do that voluntarily the government should force a law change to make it compulsory to keep records going back to the law change if they still have them. 

They should then force them to run a remediation process over those records to determine who is owed money.
Most of these payroll providers know what they have to do.

The truth is there is nothing very complicated about the calculation of annual leave. Leave was to be calculated weekly and when it was taken it should be valued at the greater of the worker’s current wage or their yearly average. This had been true since 1948.
What was clarified in the 2003 Act was that if it was difficult to determine what an ordinary week was, for example, because they worked variable hours each week, then the worker should get the higher of their yearly average or the average of the last four weeks. This was explained in the Act in minute detail. No mistaken understanding could be taken from the plain language.

It has become clear that almost no major employer or payroll provider did this simple calculation. Many also did not include regular allowances that should have been.

Payroll providers knew they were ignoring this requirement. The conspiracy to ignore the law was deliberate. We had one of them contact us to say he had been raising it at their national conventions for years as a “the elephant in the room” but been ignored.
Unite wrote to all our major employers demanding action over three years ago. At first, they simply rejected our claims and we thought we would be forced to take them to court.

Then the Ministry of Business, Industry and Enterprise (MBIE), the ministry responsible for legal minimum standards said they were paying their own employees incorrectly two years ago and the problem was widespread.

MBIE said they would directly audit the top 100 employers. For Unite that included McDonald’s and Restaurant Brands where we have thousands of members. These companies then assured us we didn’t need to take legal action and they would fix the problem and pay back our members.

We agreed to drop the legal case against McDonald’s. But we are still waiting two years later.

MBIE’s engagement with these major employers appears to be extraordinarily slow in achieving results. I have no doubt we will get there in the end but some of these companies, unlike Bunnings, have been trying to limit the time they are required to go back.
Wendy’s, for example, have only been asked to go back five years for some unknown reason. Others have asked for six years limitation.

The big employers often had their own payroll systems and they should be obliged to fix things themselves.

There should also be some accountability/responsibility on the part of the payroll providers.

Most small employers rely on them to get it right. Their deliberate ignoring of the law created a liability. The problem now is it almost “too big to fix” rather than “too big to fail”.

It is not acceptable that only the top 100 employers are being pro-actively audited.

There are no requirements being imposed on medium-sized employers or payroll providers to audit themselves and fix things. So the vast majority of workers won’t see a cent of the money stolen from them. 

That is simply not acceptable from a “Labour” government.