The issues relate to incorrect payment calculations for bereavement leave, alternative holidays, public holidays and sick leave – known as ‘BAPS’ days and, in some cases, annual leave, leading to underpayments for some employees:
1. Payments for BAPS days
Under the Holidays Act, a Relevant Daily Pay calculation is used to determine the pay an employee would have received if they had been at work and should include payments such as overtime. The payroll system did not include overtime as part of this calculation.
2. Payments for annual leave
When calculating annual leave payments for some employees, the 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. The payroll system did not include this calculation.
Some waged employees in New Zealand covered by the following collective employment agreements:
Some employees on individual waged employment agreements are also affected.
The issues do not impact employees who receive a salary (including employees covered by a collective agreement on a salary basis). This includes BCM salaried E tū employees and dairy workers paid an annualised hours salary.
Most impacted employees will receive a back payment for the period from 1 April 2010 to the date:
the issue is resolved within the system (current employees), or
their last day employed with Fonterra (former employees).
For a small number of other employees, this period will go back further.
We have contacted all current employees who are owed a back payment and have started contacting former employees using their last known home address or email address.
If you have not been contacted and believe you have a claim, or are a former employee and have moved since your employment ended, please get in touch.
Some employees are not impacted by the issues as they were paid correctly when leave was taken and/or did not work overtime.
If you are a former employee, your letter may be on its way to you or we may have out of date contact information. If you believe you have a claim, please get in touch.
Payments to impacted employees vary by individual circumstances, including leave patterns and history.
Any back payments will be less PAYE and KiwiSaver/employee superannuation deductions.
Relevant Daily Pay calculations for BAPS days involve an assessment of whether an employee would have worked overtime on a BAPS 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 BAPS 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 back payment will be made if that calculation is more than was originally paid.
Once we receive and verify your documentation, your back payment will be processed and deposited into your nominated bank account on the last Friday of the month, provided verification takes place by the 20th of that month. If we need more information from you to process your claim we will get in touch.
We are still working on resolving the issues and will ensure that the new system and processes are as robust as possible to comply with the Holidays Act. We are committed to ensuring our employees are paid correctly.
Current employees who continue to be affected by the issues will receive a further back payment once the issue is resolved.
We will not be paying interest or compensation because the issues have led to employees receiving both underpayments and overpayments. We have decided not to seek the repayment of overpayments and to instead resolve all underpayments.
Current employees have already received back payments for the period 1 April 2010 – 31 March 2018. A final back payment will be made in 2019 when the system fix is in place and we are satisfied the issue has been resolved.
For former employees, back payments will be made on a rolling basis on the last Friday of the month, provided your documents are verified by the 20th of that month.
If you are a former employee, we have sent a verification form to the address we have for you (or by email in some cases). Once received, please complete and email this form to firstname.lastname@example.org along with the following documents:
Proof of identity (both sides if double sided): copy of birth certificate, passport, certificate of citizenship;
Tax code and IRD number: a signed Tax Code Declaration Form (IR330).
Current employees do not need to provide any documentation.
We need to verify your identity and confirm that you are authorised to act on behalf of the estate or person before processing any back payments.
If you believe you may be entitled to a back payment on behalf of an estate or a person for whom you hold power of attorney, please get in touch.
If you are a current employee we will be using the bank account we have on file for you, where you receive your wages.
If you are a former employee you are asked to provide your bank account details when you complete your verification form to ensure the back payment goes to the right place.
We appreciate that it has taken time to determine and process the back payments. The Holidays Act is a complex piece of legislation to apply and unfortunately many organisations have had challenges in doing so.
Once the issues were identified, we undertook a thorough investigation because we wanted to ensure that all our employees have been paid their entitlements and a robust process is put in place to ensure payments are correct in the future.
The affected unions are aware of the issue and have been involved in discussions about the approach to back payments and resolving the issues going forward.
If you are a KiwiSaver member your back payment will be less your KiwiSaver/employee superannuation contribution. You will also receive the company contribution.
If you are a current employee this will happen automatically, but if you are a former employee you need to provide your KiwiSaver information as part of completing your verification form.
To ensure you receive the back payment owed to you we must verify your identify and information relating to your KiwiSaver, tax and bank account.