Holidays Act & Remediation Strategy

Houlbrooke Payroll & HRIS is a business consultancy dedicated to delivering solutions to support Holidays Act Payroll Review and Remediation.

Holidays Act Requirements

The Holidays Act makes specific provisions for payments to be made to employees in respect of the days of leave taken.  This varies for annual leave and for BAPS (bereavement, alternative, public, and sick days) leave, as calculations are based on different criteria.  Historically many systems have not always kept abreast of these changes or have methods which still require human actions to correct the amounts to be paid.  Often the historical processing has not followed these requirements even after software has been updated, due to difficulty of retrospective actions in a payroll system.  This system effect along with the compounding effect of time has left employees (current and past) underpaid.

Holidays Act Review

Many businesses and organisations seek reviews of their position to identify a potential liability.  In addition to this the Ministry of Business, Innovation, and Employment conduct investigations and require businesses to complete compliance audits which bring about remediation payments and also fines.

To avoid unwanted outcomes for businesses and organisations who have been or may have been underpaying employees the Houlbrooke team has models developed to analyse historical data to assess this liability.

Historical Data

Depending on the type and scale of the system a business is currently using, the data needed will vary.  The nature of what level of review and remediation can be undertaken will also vary.  We have models designed to manage reviews of data from established payroll systems.  Pay History (typically 6-10 years) and related data can be added to the model to discover and identify the most reasonable assessment of underpayment, if any.

Reasonableness

In some instances, it is appropriate to assess whether liability is probable.  Where employees are engaged on irregular work patterns, usually not on fixed salary, have differing levels of overtime hours, and do receive pay in lumpy proportions then they are likely to trigger rates of calculation that would bring about underpayment for leave days.The model will address all of these scenarios.

Payroll Review & Remediation Strategy

There are three elements to a remediation process.

  1. Payroll Review
  2. Model and Calculate Remediation Payments
  3. Remediation Payment

Payroll Review

Before any calculation can be attempted there is a need to;

  1. determine the reasonableness of current payments.
  2. identify the system parameters that are causing underpayment of employees, if any.
  3. adjust forward processing so under payment does not recur.
  4. agree the scope of years to include in the remediation complying with the Holidays Act
  5. agree the likely impacted employees by type and frequency of payment.

Model and Calculate Remediation Payments

To model the potential under payments of leave (Annual and BAPS) the following data is relevant:

  1. Payroll transaction history
  2. Employee master files
  3. Allowance codes (identifying Annual and BAPS Leave)
  4. Any files containing employee balances held.

Remediation Payment

Once the organisation completing remediation calculations has resolved that the calculations are valid, they can then move to pay existing employees and locate former employees to make payment.  The calculations should be audited before management takes any action before communication and/or payment.

Let’s Chat

It’s time to make the most of your business

barbara@houlbrookegroup.co.nz