8 Mar 2016

Payroll issues confined to MBIE and police

4:21 pm on 8 March 2016

Only two government agencies - the Ministry of Business, Innovation and Employment (MBIE) and the police - have had significant problems with their payroll, says the States Services Commission

Finance Minister Bill English answers questions about the payroll issues on 8 March 2016 at Parliament.

Finance Minister Bill English answers questions about the payroll issues. Photo: RNZ / Jane Patterson

Labour has called for an independent inquiry over payroll issues that could affect several private and public entities, after it was revealed yesterday that thousands of workers at MBIE could have been underpaid for decades.

Last month, current and former police staff were repaid tens of millions of dollars after a payroll botchup nearly seven years ago.

Finance Minister Bill English today warned there might be widespread problems with payrolls in the public and the private sectors, as a result of a law change more than 10 years ago.

Mr English asked all public sector chief executives to check their payroll systems and said he had been contacted by some private companies, concerned they might be facing the same problem.

The errors stemmed from a 2004 change to the Holidays Act and appeared to affect employees whose hours and entitlements varied from week to week, he said.

However, the Commission subsequently said it had been working with state service agencies and provided them "with guidance developed with MBIE for state services to help agencies to assess whether an audit of their compliance with the Act is required".

And it said most agencies had assessed "no or only minor issues", with only the police and MBIE having identified any significant problems.

The Commission said it continued to monitor the situation and would work with agencies where necessary.

Workplace Relations and Employment Minister Michael Woodhouse said he had had a lot of feedback that administering the Holidays Act was complex.

"The challenge is actually simplifying it without reducing peoples' entitlements - I'm not sure we can do that but I'm listening very carefully."

Mr Woodhouse said some private sector companies have had problems with payroll.

But he said it was important not to "overcook" the size of the problem.

"The Holidays Act does have some complexities with it, but by and large I'm confident that employers are compliant with it."

The 2004 law change was made under the previous Labour government.

However, Labour Party leader Andrew Little said it was an indictment on the current government that it had taken so long to identify the problem.

Mr English said if there had been payroll errors within the public sector, agencies would have to make any repayments owed out of existing budgets.

Labour's Economic Development spokesperson, David Clark, said a panel appointed by MBIE should not be given the responsibility to find out what happened.

He said now that several agencies could be affected, an independent inquiry was needed.

"It is highly questionable whether MBIE is the right agency to fix this situation when it has a number of issues to sort out itself.

"This must be fixed with the utmost urgency so working people can have confidence in their weekly pay packet."

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