Holiday pay mistakes affecting more than 9000 government workers are expected to cost at least $10 million to set right.
A spokesperson for Spotless acknowledged there had been 'short-term discrepancies' in payments. Photo: 123RF
The Ministry of Business, Innovation and Employment has set aside $10.15 million to address the underpayments that date back to a 2004 change in the Holidays Act.
Although the mistakes were discovered early last year, staff have not been repaid despite being told that would happen by the end of this year.
The new target was early 2018, the ministry said.
"The project covers more than 9000 current and former employees, with a mix of working patterns, over more than nine years," it said in a statement to RNZ.
"We're being robust in our processes and testing, and the complexity and scale of the work means this is taking time."
But RNZ understands that frustration among staff is mounting.
The Public Service Association declined to comment as it is in pay talks with the ministry.
In a briefing to the incoming minister released on Thursday, the ministry said it wanted a whole new payroll system, and tender documents show this system could cover other departments too.
It needed a better system to cope with "significant operational risks" including how to stay within the law, it said in the ministerial briefing.
It had to be flexible so that the ministry could "provide a shared payroll service to other government departments as part of any future departmental re-organisations, including to departments that are not currently part of MBIE."
This is followed by a draft bid period till the end of January.
A notice said the the payroll solution must be "fully compliant" with the Holidays Act.
"We had a good laugh when we saw this requirement," said David Jenkins, who heads the 1100-member Payroll Practitioners Association.
The association "does not believe there is such a thing as a fully compliant payroll system in regard to the Holidays Act", he said in an earlier blog about the new system.
"The Act is written in a way that the employer can be challenged on any aspect based on the flavour of the month, MBIE's and labour inspectors' changing views ... and the differing opinions of the legal profession."
Mr Jenkins added that ever since the super-ministry was formed in 2012, it had been a fruitless effort to get it to help payroll suppliers design systems that would comply.
"Any payroll solution MBIE selects will be so politically motivated it will most likely be selected by non-payroll people."
He also criticised the time it had taken for the ministry to front up over its own breaches of the Holidays Act.
"MBIE is usually happy to publicise employers' shortfalls in regard to outstanding monies."
Mr Jenkins told RNZ he would write to the government next week urging it to make changes, even minor ones, to the Act.