Holidays Act compliance – Schools payroll

The Holidays Act 2003 was set up to promote work/life balance for employees. It sets out how employers should pay staff for annual holidays, public holidays, sick leave and bereavement leave.

Schools payroll non-compliance

Non-compliance of the Holidays Act 2003 (the Act) is widespread and affects many organisations and employees, schooling sector employees included.

Due to the size, scale and complexity of the schools payroll, becoming compliant in all areas of the Act will take some time. The schools payroll disburses approximately $5.6 billion per annum to around 94,000 staff fortnightly at approximately 2,500 schools.

We are committed to putting this right and our priority is to get money into the pockets of employees.

We are working alongside the Labour Inspectorate, education sector unions and NZSTA on methods to calculate, back-pay and become compliant with the Act. This will require a wide range of solutions and will take some time. We have now completed our detailed analysis of where we are non-compliant and are working on solutions to address these areas.

Frequently asked questions

Below is a series of answers to some of the questions you might have.

If your question isn’t answered below, email holidays.act@education.govt.nz

Why is the Ministry looking at Holidays Act compliance?

Following information about Holidays Act non-compliance from the State Services Commission and the Labour Inspectorate in March 2016, the Ministry of Education and Education Payroll Limited (EPL), along with Deloitte, carried out an initial review of the schools payroll system.

The Initial Review, completed in December 2016, identified high-level areas of non-compliance; it did not provide the detailed analysis necessary to fully identify the root causes behind this non-compliance.

What work has been done since then?

The Ministry has carried out detailed analysis to explore and identify options to address past and present levels of non-compliance. This analysis is allowing the Ministry to identify potential solutions and provide advice on the sequencing of that work, resources required and the timeframe within which it can be completed.

Working through the complexities of non-compliance continues throughout 2022.

How many school employees are owed money?

We do not have the final number of school employees affected at this time. Whatever that number is, it will be a mix of current and former employees and we will make contact with those owed back-pay.

Why is it taking so long?

The schooling sector faces a unique set of challenge to become compliant with aspects of the Holidays Act 2003. This is because the schooling sector has many complexities resulting from a large number of collective and employment agreements, and associated payroll systems, services and practices.

The schools payroll is the largest in New Zealand with around 94,000 school staff paid each fortnight. Resolving Holidays Act problems includes working with around 2,500 schools and potentially affected employees who are covered by a number of different collective agreements.

We are committed to putting this right. Our priority is to identify and fix all Holidays Act compliance issues so that school staff can be confident they are being paid correctly, and we are working hard to make this happen.

When can I expect to be notified of any underpayment I may be entitled to?

We cannot answer that question just yet. However, it will be some time after solutions for becoming compliant have been agreed.

When is back-pay expected to be paid out?

As above, it is too early to tell. 

What if I’ve moved between schools since 2010?

Our records and those of other organisations that are part of the schools payroll system have the necessary information to identify all schooling staff, both current and former, who are owed Holidays Act back-pay.

What if I’ve left the education sector? How will I know if I’m entitled to back-pay?

As per the above. We will contact you if you are entitled to back-pay. 

Further information

The Ministry, Education Payroll Ltd (EPL) and independent advisers Deloitte have carried out an initial high level review (School Sector Payroll Holidays Act Compliance Review) of the schools payroll to examine whether it complies with the Holidays Act 2003.

School Sector Payroll Holidays Act Compliance Review – Initiate Phase Summary Paper [PDF, 2.2 MB]

The report found that in some areas the payroll service does not comply. The general areas of non-compliance relate to the way pay for different types of leave has been recorded, calculated and applied.

Employment New Zealand(external link) – The Labour Inspectorate’s website

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