Tens of thousands of businesses urged to check if they’ve been underpaying staff

Tens of thousands of businesses are being urged to check if their payroll systems have been underpaying employees.


File image. Photo: 123RF

The accounting software provider MYOB has found problems with how seven of its payroll systems make some calculations, especially around leave and entitlements for workers on varied hours and where there are changes to work or leave patterns.

“The issues affect a range of our NZ payroll software products including IMS, Essentials, Ace, NZ Payroll, Exo, Greentree and PayGlobal and we have reached out to our customers who use these products,” MYOB told RNZ in a statement today.

“Software updates and enhancements will be rolled out across all our NZ payroll products.”

In some cases, the systems had not calculated leave rates or entitlements consistently with the Holidays Act 2003.

Breaches nationwide of the complex Act, first identified about five years ago, are costing thousands of employers and government agencies hundreds of millions of dollars to fix, both in paying arrears and in replacing payroll systems.

MYOB said businesses could get help from its specialists, and would need to review pay records going back for up to six years.

“As each business is different, you will need to assess whether these issues apply to you, and the steps you may need to take to satisfy your obligations under the Holidays Act,” it said.

Six years is the liability period for employers to pay any arrears.

The Payroll Practitioners Association said tens of thousands of businesses – mostly small and medium-sized – used the seven systems.

Association chief executive David Jenkins said: “They need to do the checks.

“It’s the employer’s responsibility to get it right. I know there’s a cost to it, it’s the worst possible time,” he said, referring to the Covid-19 pandemic.

Audits by the association had found many of the country’s 90-plus payroll systems had calculated pay in breach of the Holidays Act, sometimes over a long period, he said.

“[We have] one at the moment that’s going to be well over the $200,000 mark for under-payments for leave at a workplace with 700 employees.”

The Holidays Act had changed very little since 2003 so payroll systems should be able to work within it, Jenkins said.

“Any payroll provider should be providing a system that when I purchase [it], I should have confidence that the system is doing what it needs to do as per law.”

MYOB taking action

MYOB said it was issuing software upgrades.

The company recognised the issue came at a “challenging time” for many customers, and it was “undertaking an extensive programme of work to deliver product upgrades and enhancements, independent product testing, and customer support”, it said.

The government wants to simplify the Holidays Act.

However, its response to a review it ordered of the law is many months overdue.

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