The Council of Trade Unions (CTU) is urging the government to beef up its labour inspectorate to ensure workers who have been shortchanged on holiday pay are reimbursed.
The CTU wants the labour inspectorate to make sure workers are getting paid back. Photo: 123 RF
Payroll errors were revealed after a problem with Holidays Act compliance was identified in some government agencies. The government subsequently acknowledged the mistakes could be much more widespread, but had not disclosed specific numbers.
Documents show the Ministry of Business, Innovation Employment (MBIE) in 2014 estimated the total cost around the country could top $2 billion, and affect up to 760,000 employees.
The government says the full extent of the payroll problem will not be known for several more months.
Revenue Minister Michael Woodhouse yesterday dismissed officials' $2bn estimate of the total cost as unhelpful and premature.
CTU secretary Sam Huggard said the government was right to be focused on ensuring the pay is calculated correctly in future, but needed to do more to ensure workers are paid back.
-"The calculations in the Holidays Act aren't particularly complex"- Sam Huggard
"What's the system to make sure we go through and systematically work with all those companies to work out where the problems lie and make sure workers are getting their backpay and their rightful entitlements?"
Mr Huggard said resources for the labour inspectorate should be boosted to make sure problems are addressed.
Payroll systems expert Matthew Gardner said employers would up wearing the cost, but software developers should take responsibility.
Mr Gardner, managing director of Smoothpay Payroll, said when the Holidays Act changed 12 years ago, software developers did not update their systems, and employers often select systems that are not fit for purpose.
"Software developers... carried on doing annual leave they way they'd always done it" -Matthew Gardner
"The employer is the one who's going to carry the can for this. The developers should be held to account, they should bring their systems up to standard or remove themselves."
Mr Woodhouse said the government was working with employers to make sure they were paying staff properly.
But it was not looking at penalising those who have been miscalculating.
"My preference, and certainly the labour inspectors' preference, is to take an engaging and educative role - because we know that the law is complex - before we jump to sanctions.
"I think sanctions are best applied when there's wilful non-compliance."
Labour Party MP David Clark accused the government of failing to prevent the problem spiralling out of control.
"They need to make sure the law is enforced. They need to make sure that working people are being paid correctly."