New Zealand Law Society - Labour Inspectorate outlines employer investigations

Labour Inspectorate outlines employer investigations

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MBIE's Labour Inspectorate General Manager George Mason says the Labour Inspectorate has investigated 42 employers for payroll-related breaches of the Holidays Act 2003 since 2012, and is planning more targeted investigations.

Mr Mason says at risk employers are those who have employees who have fluctuations in the hours they work, or receive additional pay on top of their normal wages, such as for shift work or commission payments.

"The key issue is for employers to record daily hours and extra payments made and input that into their payroll IT systems, especially where employees work fluctuating hours and or receive fluctuating pay," he says. 

"The employer needs to make sure leave payment calculations are taking into account the fluctuations in the hours worked or pay received. They cannot just take a 'set and forget' approach to their payroll and expect to be compliant with the Holidays Act."

As well as its targeted investigations and engagements with employers, the Labour Inspectorate is also working with payroll and professional business service providers to strengthen payroll system performance.

"The issue is not just about the payroll IT. It's also about how the employer integrates the payroll system into their business, how they make sure that they are inputting variable hours of work and any pay fluctuations and how they do regular quality assurance," Mr Mason says.

"Employers need to apply a level of effort and resources to ensure they comply with the Holidays Act just as they do to ensure compliance with other legal requirements which may have a degree of complexity - such as tax law.

"Where problems with payroll exist, the Labour Inspectorate has a clear expectation that employers will rectify the issues to ensure future compliance. They must also take appropriate steps to remediate employees for past breaches."

"Many employers have worked very constructively with the Labour Inspectorate, their payroll and other professional business service providers to put things right – and in cases where they have been more reluctant, the Labour Inspectorate has taken stronger enforcement action through Improvement Notices and by lodging action at the Employment Relations Authority."

Of the 42 investigations, 20 had been completed, and so far have involved ten Improvement Notices, six Enforceable Undertakings, one application being lodged with the Employment Relations Authority, and two voluntary compliance acts. 

To date, arrears have been determined in eight cases, covering around 24,000 employees. The amount of arrears varies significantly for both employers and employees, ranging from an average $70 per worker to around $1800 per worker.