Chorus Holidays Act Remediation Programme
Across New Zealand, businesses and government departments have been addressing issues with calculations of their people's leave (holiday pay) to make sure it's compliant with the Holidays Act 2003.
The issue has been wide spread and Chorus has had a team working hard behind the scenes to understand any potential impacts for our people for quite some time. In fact, we've been recalculating the value of all historic annual leave, sick leave, bereavement leave, education leave, domestic violence leave, alternative leave and public holiday payments for every one of our people in every fortnightly pay period, back to 22 January 2010.
As this goes back to before Chorus demerged from Spark (formerly Telecom), we've worked alongside Spark (who did their own similar exercise in 2017) to make sure we had all the data we needed to perform accurate recalculations.
For most of our people there was no difference between these new pay calculations and what was originally paid. However, for some it has highlighted underpayments or overpayments.
What's the problem for Chorus?
The issue for Chorus relates to how some parts of our payroll system were configured to interpret the Holidays Act. Not everyone is impacted, and those that might be are most likely to have had fluctuating hours and/or fluctuating pay – e.g. earning overtime or additional allowances for a period of time, or changing their hours per week, either temporarily or permanently.
The issues for Chorus haven't been straight forward and there are many variables that contribute to individual impacts (e.g. employees who have changed total weekly hours or had variable fortnightly earnings, taken leave in advance etc) but at a high level the areas we have addressed are:
1. Payments for BEDVAPS (Bereavement, Education, Domestic Violence, Alternative, Public Holiday & Sick Leave)
Under the Holidays Act, a Relevant Daily Pay or Average Daily Pay calculation is used to determine the pay an employee would have received if they had been at work and in some instances should include payments such as overtime. Our payroll system did not include overtime as part of this calculation.
2. Payments for annual leave
When calculating annual leave payments for some employees, our payroll system paid the greater of two different Holidays Act calculation amounts (either an employee’s ordinary weekly pay or their average weekly earnings). However, under the Holidays Act, a third calculation should also be considered if an employee’s ordinary weekly pay is not clear. Our payroll system did not include this calculation.
There are three potential outcomes for both our current and previous employees – these are as follows:
|You were regrettably underpaid and will receive a remediation payment||
We found some payments that weren't calculated correctly, meaning we underpaid you for one or more periods of leave.
This could additionally have included overpayments at any point in time, but we have chosen not to 'net out' or recover these amounts from the underpayment’s figures.
|You were overpaid||
We found some payments that weren't calculated correctly, meaning we overpaid you for one or more periods of leave.
This only applies to individuals who received a combination of correct payments and incorrect overpayments together - if you additionally were underpaid at any point in time, you will have been classed in the above 'underpaid' group instead.
|You were paid correctly||Your work and pay circumstances have meant that you didn't require any exceptional handling of your pay calculations for leave and no remediation is required.|
As per above, the detailed analysis phase of the earnings data confirmed that sometimes our payroll system was creating overpayments – we want to be really transparent with our proposed handling of these.
Firstly, an overpayment in the context of leave calculations is classed as including more than an individual's contractual or statutory entitlements. Some overpayments have occurred due to the system pulling additional data into the leave value calculations.
Where an overpayment has occurred, we have removed the overpayment amount from the individual's total gross earnings where it is used to calculate the value of the next period of leave taken. This ensured that we weren't creating overpayments on top of overpayments and that we were effectively correcting historical gross earnings figures – which are used to calculate leave values – to only use the earnings that relate to individuals contractual and statutory entitlements. This has no impact on tax, KiwiSaver etc and does not in any way recover the amounts overpaid.
Chorus' current position on overpayments is that we don't intend to seek reimbursement.
You can contact us via firstname.lastname@example.org with any questions or concerns on overpayments.
Chorus’ progress to date:
Having made historical remediation payments to our current employees, we now turn our effort to contact former employees who are due remediation payments.
How will I know if I am entitled to payment?
Not everyone is due a remediation payment, but those who might be:
- were employed by Chorus since demerger (From 01 December 2011), or
- worked in the Chorus Business Unit prior to demerger (between January 2010 and 30 November 2011), and
- in most cases, fluctuated in their hours or pay (e.g. overtime etc)
We are currently working on contacting those who are owed remediation, this will take time to work through though as we won’t have current contact details for all. You are welcome to connect with us directly on email@example.com
Once connected, we’ll need to verify your identity before being able to confirm if you are owed any payment – we need to take this step to ensure privacy of everyone’s data.
The verification process includes providing us with:
- Proof of Identity: driver’s license, current passport, certificate of citizenship or immigration NZ Visa if applicable, and
- Your IRD number
From there, if you are confirmed as being owed any remediation payments, we’ll then ask you to provide the following:
- A signed and completed IR330, and
- If you are contributing to KiwiSaver, a signed KiwiSaver Deduction form – KS2 to confirm the appropriate deductions, and
- Confirmation of current New Zealand based bank account details (we will supply the required form for you to complete)
If you are connecting with us on behalf of a deceased person, or someone for whom you hold power of attorney:
Please forward us the following so we can confirm if a remediation payment is due for the person you represent:
1. Proof of Identity: birth certificate, passport, certificate of citizenship, immigration NZ Visa, drivers’ licence, and
2. Official documentation confirming you are authorised to act on behalf of the estate or person
More useful questions
Relevant Daily Pay calculations for BEDVAPS (Bereavement, Education, Domestic Violence, Alternative, Public Holiday & Sick Leave) days involve an assessment of whether an employee would have worked overtime on a BEDVAPS day.
We have adopted ’decision-tree logic’ to help determine this, which is based on identifying patterns, and used a third-party payroll specialist to run calculations about the likelihood of an employee working overtime on a day they took BEDVAPS leave. This approach has been used by other organisations who have had similar issues.
For annual leave payments, the calculation that should be considered if an employee’s ordinary pay is not clear is applied and a remediation payment will be made if that calculation is more than was originally paid.
As per legislation this payment will be treated as a lump sum payment.
To understand if the payment will impact payments such as child support of other benefits, please speak to the relevant agencies that administer these services.
If you are a KiwiSaver member any back payment will be subject to KiwiSaver deductions, both for you as an employee and Chorus as the ‘employer’.
The calculations required to determine the amount you’re owed are long and complex. We’ve worked with the Ministry of Business Innovation & Employment (MBIE) to ensure the calculation used is correct.
While we’re not providing the detailed calculations as a matter of course, we can provide them to you upon request.
For further information, please contact firstname.lastname@example.org