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Holidays Act Remediation
In late 2021 Animates became aware along with many other New Zealand businesses that due to the complexities of the Holidays Act 2003 (the Act) and how the Act was applied, we have mistakenly underpaid some former employees their holiday pay entitlements including annual leave and family violence, bereavement, alternate day, public holiday and sick leave.
We are very sorry and disappointed this error has occurred and have been working with a third-party payroll specialist to review our systems and processes, complete historical recalculations of leave entitlements and ensure our payroll system and processes are compliant with the Act.
We will be contacting all former employees by the end of October at their last known email address to advise whether they are impacted by this issue. Please follow this link to update your contact details.
Frequently Asked Questions
What are the issues?
The issues relate to incorrect payment calculations for family violence, bereavement leave, alternative holidays, public holidays and sick leave – known as ‘FBAPS’ days and, in some cases, annual leave, leading to underpayments for some former employees.
Which leave types are being recalculated?
1. Payments for FBAPS days
Under the Act, an employee should receive Relevant Daily Pay when they take FBAPS leave (the amount they would be paid had they been at work that day). If an employee’s Relevant Daily Pay is not possible or not practical to determine due to a varying work pattern, Average Daily Pay should be calculated and paid. Average Daily Pay is calculated as the average earnings of the previous 52 weeks, divided by the number of actual days worked. This issue most often affects former employees who worked highly variable hours.
2. Payments for Annual Leave
When calculating annual leave payments for some employees, the payroll system paid the greater of two different calculation amounts under the Act: an employee’s ordinary weekly pay or their average weekly earnings. However, under the Act, a third calculation should also be considered if it is not possible or practical to determine an employee’s ordinary weekly pay because they work more variable hours. The payroll system did not include this third calculation for relevant employees.
3. Definition of a Week
Under the Act, an employee should have an agreed Definition of a Week. This is important to inform leave entitlements and the portion of a week taken when an employee takes Annual Leave. There were some former employees who did not have a clearly defined Definition of a Week that reflected their actual working patterns.
Who is impacted?
The period we are reviewing relates to all people employed by Animates NZ between January 2016 and 17 July 2022.
Not all former employees who worked during this period are impacted however we will be contacting all former employees who worked during this period to advise whether they are impacted by this issue.
A remediation payment will be paid where the recalculation of leave payments identifies a difference between what was actually paid for the leave day, and what should have been paid for the leave day when the correct calculation under the Act is applied. The total calculated is a gross amount, from which income tax will be deducted, in accordance with income tax requirements. Inland Revenue can advise you on the possible tax and other financial impacts of receiving a payment.
What period will the remediation payment cover?
Historical recalculations will be for the period of your employment between January 2016 and your termination date.
How much will my payment be?
The earnings history and leave patterns for every individual are unique and every case is assessed individually. We’ll confirm if you are entitled to a remediation payment when you submit the online form. Please follow this link to access the online form.
Please note, any remediation payment will be paid less PAYE, KiwiSaver and any other deductions required by law.
How are payments calculated?
Annual leave calculations are made based on the former employee’s working pattern and entitlement to allowances at the time of employment. If an employee worked standard hours and received standard payments on a regular basis, the higher of Ordinary Weekly Pay and Average Weekly Earnings would be calculated. The inclusion of payments in these calculations is based on MBIE and legal guidance. If a former employee worked variable or irregular hours, or received additional payments, a third calculation would also be undertaken; the Ordinary Weekly Pay 4-week calculation, which would take the average gross earnings over the past 4 weeks, divided by 4. These calculations are in accordance with the Act.
For FBAPS calculations (family violence, bereavement, alternative, public holidays and sick leave), an assessment of the working pattern and entitlements to allowances would be made for the former employee’s period of employment. If the former employee worked regular and predictable hours, and received regular and predictable payments, Relevant Daily Pay would be used to determine how much the former employee should have been paid when they took FBAPS leave.
If Relevant Daily Pay was not possible or practicable to determine, Average Daily Pay would be calculated. For annual leave payments, the calculation that should be considered if the former employee’s ordinary pay is not clear would be applied, and a remediation payment will be made if that calculation is more than was originally paid.
If I am owed, when will I be paid?
You will be paid at the end of the month following submission and verification of the online form, to your nominated bank account.
Will remediation payments include interest or other compensation?
We will not be paying interest or compensation:
1. Animates (NZ) Holdings Ltd is not legally required to pay interest or compensation in this situation.
2. Where possible, the most favourable assumption and the most generous method of calculation is applied.
3. These issues have led to employees receiving both underpayments and overpayments. We will not be seeking repayment of overpayments however we will be resolving all underpayments.
Why has this process taken so long?
The issues are complex and affects over 1800 people, so it has taken time to work through all the data.
We are taking all possible steps to ensure we get this right for our people and former employees, while ensuring compliance in the future. Our focus is to ensure the historical recalculations are as accurate as possible.
What tax impacts will there be on payments?
We encourage you to contact the Inland Revenue Department or your Accountant for advice about whether your remediation payment affects any agreement you have with them about your current earnings, benefits, child support or any other matters.
The Inland Revenue website has useful information on tax treatment of lump sum payments here.
You can also contact the IRD directly on 0800 227 774, or via your online MyIR account.
Who can I contact if I need more information?
Please send any questions to firstname.lastname@example.org
|FBAPS||Family violence leave, bereavement leave, alternative holidays, public holidays and sick leave|
|Relevant Daily Pay||The amount you would be paid had you been at work that day|
|Average Daily Pay||Calculation used to determine what you should be paid for FBAPS when it is not possible or practical to determine Relevant Daily Pay due to a varying work pattern. Calculated as the earnings of the previous 52 weeks, divided by the number of actual days worked|
|Ordinary Weekly Pay||The amount ordinarily paid to you weekly – applies to those who work regular hours every week|
|Average Weekly Earnings||Your gross income earned in the last 52 weeks prior to the leave being taken, divided by 52 to obtain a weekly value|
|Definition of a Week||The work pattern at the time leave is taken|