What are the issues relating to the Holidays Act and holiday/leave payments?
The Holidays Act 2003 covers pay and entitlements surrounding all types of leave and public holidays for employees in New Zealand.
While it’s easy to follow for those working standard hours and on standard salaries, the act has proved complicated for employees on shift work, commission based roles, variable days and hours, or with flexible work patterns. This means employers have difficulty interpreting and applying the rules.
Flight Centre has a very complicated remuneration structure which led to issues in incorrectly calculating leave entitlements during the period from 2011 to 2018.
What has been done to fix it?
We have worked with Deloitte, Ministry of Business, Innovation and Employment (MBIE) and our Payroll to ensure that calculations are now correct under the current legislation.
Additionally there is a review of the Act underway by the Government to try and make it simpler and easier for all companies to comply with, avoiding future confusion and error.
Is everyone getting a payment?
No, it depends on whether you were employed during the impacted period, what leave you took and how it was calculated.
What period are you covering? Why aren’t you going back further?
Leave taken from 9th August 2011 to 31st May 2018 has been audited.
Under legislation we were required to look at the 6 years prior to us becoming aware of the issues. This was on the 4 September 2017.
Why has it taken so long?
We’ve been working on this alongside the Ministry of Business, Innovation and Employment (MBIE) and Deloitte (an accounting firm) for over 2 years. We are committed to making sure we get it right and that you are paid any monies owed correctly.
Our pay structures are complex due to the commission and KPI based nature of them. This complexity has meant the modelling required is extensive, and each review or requested change requires a significant amount of re-work.
Each audit must be signed off by MBIE before we are allowed to make any payments.
How much am I getting paid?
Everyone is different depending on what holidays you took, what your remuneration structure is and whether your pay was calculated incorrectly.
You will receive a letter with your individual amount on it.
Will payments include interest?
No, this was a genuine error and we have worked to resolve this once known.
Why haven’t I received a letter or email advising what I’m owed?
There are two reasons why this may have happened:
- You may be one of the people who are not affected by these issues.
- The address or email address we have for you may not be your current address. We encourage former employees to complete our online application form . We can then check if you are owed a payment.
How do I know you have calculated it correctly?
We’ve used Deloitte’s expertise to review all affected employees’ leave records, payments, and data back to 9 August 2011 and recalculated the back payments. We have been working with the Labour Inspectorate at the Ministry of Business, Innovation and Employment (MBIE) for over 2 years, and they have further checked and approved all methodology. This has been a very thorough process to make sure you’re getting what you’re entitled to.
Is there a minimum amount you are paying out?
No we will pay as little as $1 if that is what you are owed.
I worked for Flight Centre in another country during that time, is that period included in my calculation?
No, this is just an issue with the NZ Holiday legislation and leave you have taken while working in other countries wouldn’t have been affected.
Will I receive a payslip showing this payment?
Yes, at the time you are paid.
What happens if it shows in the audit you overpaid me?
Nothing, we won’t be requesting any overpayment back from you.
Can I request that my payment is made into an overseas bank account??
Payment can be made into a nominated international bank account.
Please note that for any international payments that you are still required to pay income tax.
The following bank fees apply – $25.00 per transaction bank handling fee, in addition a further fee determined on the selected currency applies AUD/USD/EUR/GBP – $5.00 and FJD/VUV/WST – $35.00
Further bank charges may apply locally and are outside of Flight Centre’s control. Currency conversion will at the daily rate provided by the bank. Please note that any errors in bank account details on international payments that mean transactions are rejected or paid to the incorrect account may incur additional fees.
Can you pay it into someone else’s bank account?
No payments will only be paid into your bank account.
How do I seek payment for a deceased employee or one I hold the power of attorney for?
We will need you to provide documentation to verify your identity and to confirm that you are authorised to act on behalf of the former employee’s estate. Please contact holidaypay@flightcentre.co.nz and we will get in touch with you to progress this.
Will this payment affect my benefit or Working for Families payment?
Your back payment may affect your Working for Families entitlement or disability allowance for the year ended 31 March 2021/2022. Please refer to www.ird.govt.nz or call the IRD on 0800 227 773 you need further information. The Inland Revenue website has a useful factsheet for employees on the receipt of a lump sum payment such as an arrears payment that can be found using the following link:
Has child support been deducted from my back-pay amount? (If applicable)
No. You may need to advise the IRD that your family income has changed. You can do this anytime online through myIR at www.ird.govt.nz or you can call the IRD on 0800 227 773. The Inland Revenue website has a useful factsheet for employees on the receipt of a lump sum payment such as an arrears payment that can be found using the following link:
If I no longer work for Flight Centre will I still get paid?
Yes, you need to follow the process for ex-employees on our website so we can assess your claim.
When will I be paid
If you’re due an underpayment, we will pay the amount into your nominated bank account on the 25th of the month following your claim being processed and approved e.g. if your claim is approved on the 15th June you will be paid on the 25th June. If your claim is approved on the 27th June you will be paid on the 25th July.
If the 25th of the month falls on a weekend or public holiday you will be paid the following working day.
Will this be taxed?
Past employees will be required to complete an IR330 form.
Income tax (PAYE) will be deducted from all remediation payments in accordance with the tax code you provide to us as declared in your signed Tax Code Declaration Form (IR330).
For some past employees, the remediation payment may result in a tax refund being due from Inland Revenue. Employees should review their tax positions to determine whether they are due a refund. Refer to this Inland Revenue link: https://www.ird.govt.nz/income-tax-individual/end-year
Any other tax concerns / questions should be directed to the IRD.
What happens with KiwiSaver and other benefits / deductions?
Holidays Act 2003 remediation payments will be subject to normal KiwiSaver and other applicable deductions that are in place at the time of payment such as student loan repayments.
For past employees you will be required to complete KS2 (KiwiSaver Forms),
Should no Kiwisaver form be provided, no contributions will be made and the payment made to you will not have Kiwisaver contributions deducted.
We encourage you to make contact with relevant organisations such as Inland Revenue to discuss any impact this remediation payment might have on child support, working for family tax credits or other such matters.
Does the payment include Student Loan deductions?
Yes, if you have a student loan tax code. You will need to provide this in your submission.
What documents do I need to provide?
As you are a past employee we will need proof of identity, proof of bank account details, IRD and Kiwisaver forms completed plus any documentation showing change in name.(if any)