Author: David Jenkins, NZPPA CEO

We are still waiting on the Minister to release the Holidays Act Review Report, which after several delays was provided to him in early October 2019.  

NZPPA and a small group of payroll providers were involved in a meeting before the report was forwarded to the Minister. At that meeting we heard what the review group was planning to report to the Minister (subject to change).

The potential changes are embargoed and NZPPA won’t release them as what we saw at the meeting and what the Minister finally releases may be different.  I will, however, state this now: I doubt there will be any difference from what was stated at the meeting on the 12 September. It was only lip service that payroll providers and NZPPA were allowed to see the potential recommendations and were asked for feedback two weeks out from when the report was to go to the Minister.  

NZPPA gave feedback and you will see part of our response below (without reference to what the proposed changes to the Holidays Act could be).  On talking to the other payroll providers present at that meeting who also provided feedback to the review group, none has received any follow up on what they put forward. This just adds weight to our view that this attempt to get payroll involved at the very last minute of a review conducted over a year ago was just lip service.

I have included NZPPA’s feedback to the 12 September meeting, but have stopped short on detailing the actual changes that were presented.  Once the report is released, NZPPA will then publish in full our feedback and will also critically review and post about the report’s flawed solutions to the issues with the Holidays Act. 

NZPPA response to Holidays Act Review Recommendations

Dear Review Group

Here is the feedback back from the New Zealand Payroll Practitioners Association (NZPPA) on the proposed recommendations to the Holidays Act 2003.

Far too little too late.

It has been very disappointing to see that payroll finally gets to be involved only two weeks out from the review report’s presentation to the Minister.

The meeting held on the 12 September 2019 for just over two hours can only be seen as lip service, so the review group can tick a box to say they have had payroll’s involvement.

The presentation stated the review was based on three principles: certainty, transparency and practicality.  However, when questions were asked from the group, none of the three principles could be seen in the recommendations made or answers provided (if they could be answered), so that can only be seen as an overall fail for the review’s outcomes.

NZPPA has raised this issue before, but the inclusion of a payroll provider in the review group is totally unsatisfactory at any level.  If this representative was involved and confirmed these options could be workable in payroll, it clearly shows they are not technically skilled or don’t have the required payroll knowledge to make any workable changes going forward in an end-to-end payroll system.  

The recommendations put forward by the review group will be seen as coming from people that know payroll with payroll involved in providing workable recommendations. However, from what was presented it doesn’t look as though they are workable in any shape or form and this will taint any select committee process as the testing and review will be seen as being a comprehensive response to any bill based on its recommendations.  It was more important to get payroll involved in the review fully early on so recommendations made were sound and would actually work in resolving the issues we currently have with the Holidays Act.  The review group and the process followed has now lost that opportunity and its recommendations will add to a further failure of the Holidays Act going forward. 

The tester used for the recommendations put forward is clearly not from a payroll system perspective and, as it was stated, is some sort of outsourced provider.  With the glaring holes in the lack of detail not provided in the presentation, the quality of this testing and what has been actually tested could not be determined and shows the incompetence of the review group in understanding how calculations would actually need to be designed and configured in a payroll system while also considering end-to-end payroll processing.  

The focus on systemising calculations has been warped by the lack of understanding apparent within the review group and the tester used.  It is essential that any calculations should be simple enough that a payroll practitioner, or even a small business owner or employee is able with a pen and paper, calculator or an Excel spreadsheet to calculate or recreate leave taken for an employee.  This is what has been clearly missing from the current Holidays Act and fits with the principles that the review group is aiming to achieve. However, from what has been put forward in the presentation, the group has totally failed to achieve this.  

What was presented as part of the recommendations, even though incomplete, is in some ways even more complex than what is currently done to calculate an employee’s leave. Without the help of a supercomputer, these calculations could not easily be done if at all by pen and paper.  

If this were to be implemented, there would be a further feeding frenzy from MBIE labour inspectors taking employers to task for incorrectly calculating leave because employers and payroll would still not be able to show they have met the requirements of the Act, or the judgement calls being made could be interpreted differently by other parties (such as employees, unions, legal representatives and the labour inspectorate).  The review group still does not seem to understand (using their principles) that for an effective calculation to be workable it must be: 

• Transparent – you can see how it is calculated, what’s been included or not, over what period of time and what measure of time is being used (hours, days or weeks). 
• Practical – can easily be calculated using a pen and paper, Excel (or similar) and can be done at any time for any period of assessment (up to 6 years) and doesn’t mean a drawn-out process that takes time, resources and money to complete.
• Certain – a range of people, systems and external parties can all get to the same outcome when the calculation is applied because the calculation is defined, along with all the inputs that need to be included.  We must move away from MBIE’s view that if an outcome cannot be confirmed by parties then the higher of should be used.  This clearly slows the calculation is fundamentally flawed.

Along with the above, any calculation – even multiple calculations – should only be able to be done one way, without variation.  From statements made in the presentation it seems as though there are still too many judgement calls on how these calculations can be applied, hence the difference in outcomes.

Please note: the actual feedback on the changes proposed have been removed and until released by the Minister NZPPA will not be discussing them at this point.

As stated, the inclusion of payroll providers along with NZPPA at the last minute was for the purpose of ticking a box and is seen as just lip service. There had been a lot of hope from the payroll industry that our needs would finally be heard as part of this review so the Holidays Act could be made workable, but the review group failed to involve payroll at any meaningful way and NZPPA now considers this review to have failed in what it was established to achieve. 

When the report is finally released NZPPA will be clearly stating that the report was not based on what payroll needs to make the Holidays Act workable because payroll was not allowed to be involved in or consulted with on the recommendations made. The only way to make the Holidays Act workable is to start with a greenfields approach with the outcome focused on fixing the present issues (covering the 6 years of liability) and making the act workable going forward) while fully interacting with payroll on how those changes could be achieved in a payroll system and ensuing it did meet the principles of certainty, transparency and practicality.   

In conclusion we can all hope for a Christmas miracle or a New Year’s resolution that the review will fix the Holidays Act BUT as stated above – Far too little too late.