On The Job: Payroll professionals add value

According to the latest NGA Human Resources Global Payroll Complexity Index, New Zealand is ranked 10th internationally for payroll complexity and 5th for the complexity of government reporting.

Despite this, David Jenkins, the chief executive of the New Zealand Payroll Practitioners Association, says there is a distinct attempt to outsource and deskill the payroll profession across New Zealand.

News this year that as many as hundreds of thousands of workers are owed millions of dollars in holiday pay came as a surprise to many, though not to a number of payroll experts.

The Holidays Act can be complex, with different types of pay calculations for leave (annual, sick and bereavement) as well as public holidays and in particular, those who work with a variation in hours.

Workers across New Zealand have not been receiving their full entitlement or have received incorrect payments due to these leave pay provisions, particularly affecting those who work irregular hours and have allowances.

“There are only two ways to fix this,” says PSA finance officer Ryan O’Shea, “Either employers will have to pay more, or workers will have to lose.”

The PSA response

All employers that the PSA deals with have been written to, with the expectation that all will audit their payrolls and swiftly identify and resolve any underpayments in recent years. We are also working with the Ministry of Business, Innovation and Employment, and the State Services Commission on how to resolve this issue on a system-wide level.

David Jenkins describes the Holidays Act as a ‘political hot potato’, despite raising concerns with MBIE and the government over the last couple of years. 

The payroll botch-up has come as no surprise to Jenkins who said “this is nothing new and we’ve been raising these exact same issues for years now yet the Government continues to turn its back on it.”

The need for skills and training

Jenkins says recent events highlight the imperative need for skilled payroll people.

“We’ve seen it with Novopay and we’re seeing it again with the emergence of non-compliant [payroll] systems and especially the outsourcing of payroll, and despite it looking cheap on paper, the system can never replace the payroll person. We need more of a fluidity of skilled payroll people to ensure a robust and working system,” says Jenkins.

Ryan O’Shea agrees: “There is an assumption that the payroll system itself does all the work, and payroll staff are just machine operators, but that’s not true. Recent examples like Novopay and the Holidays Act underpayments demonstrate that clearly.

“As pay becomes more complex, with differing hours, allowances and more, the importance of having payroll staff who understand the legislation, how their payroll systems derive results and the calculations that their systems use is vital,” O’Shea says.

It has become clear that while the Holidays Act 2003 may be a ‘political hot potato’, those in the profession have said that we cannot afford for it remain like this, citing the need for Government to step up and take some responsibility.

Many in the profession are calling for clearer legislative definitions, even around the word ‘regular’, but above all, properly recognising the importance of skilled and trained payroll professionals will help make sure widespread errors like this are not repeated.

By Kieran Meredith