Following a review of our pay systems, we have discovered that some previous employees are owed a leave correction payment due to anomalies with our Holiday Act Leave calculations.
Spark recently moved to a new payroll provider – Ramco. In making the move to Ramco we took a best practice approach and, involving external consultants, undertook a compliance review to ensure pay and leave calculations were in line with the Holidays Act – all so we could be confident we are paying our people correctly.
While our review showed that we had been paying people correctly for almost all aspects of their pay, it did highlight a few anomalies for some of our people – both present and past employees – and that specific leave calculations in the old payroll system (Portal) did not always match the Holiday Act leave calculation requirements.
What the review highlighted:
Our review highlighted only two specific leave calculations in our prior system that didn’t match the Holidays Act requirements:
When we discovered this, we brought in external consultants who performed a detailed analysis of the situation. We found that for some people there was a difference in what they were being paid versus what they should have been paid.
What we're doing about it:
It is part of Sparks DNA that if we've got something wrong then we set about fixing it. So, we are focused on identifying who has been impacted to make sure that they're paid what we owe them.
Who is owed a payment for historic leave calculation corrections?
A payment is owed where there is a difference between what was paid for the leave day, and what should have been paid if the correct calculation had been made. We are not recovering overpayments where the amount originally paid for the leave is higher than what should have been paid. The total calculated is a gross amount, from which income tax will be deducted, in accordance with income tax requirements. Inland Revenue is able to advise employees on the possible tax and other financial impacts of receiving a payment.
How will I know if I'm due a payment for any of the prior leave types I may have taken?
We have emailed former Spark employees who are due a payment where we had a personal email address on file. Because we do not hold personal email addresses for all affected former employees, we have advertised the remediation through public channels and our web portal can confirm whether or not you are due a payment based on your IRD number. If a payment is due, you will be asked to provide further details to verify your identity and then issued with a unique token and instructions on how to receive your payment.
How much will my payment be?
Payments are based on an individual's earnings and leave patterns.
Will people receive different amounts?
Yes, as calculations are based on each individual employees' earnings history and leave patterns and as everyone works a little differently, payments will be different.
How far will you be looking back?
We will look all the way back to 1 January 2014, and therefore any employees employed during this time will be in scope for the review.
Is there a chance people may have been overpaid?
Yes. However, we will not be asking anyone who has been overpaid to repay anything.
What tax impacts will there be on payments?
These payments will naturally need to be taxed as appropriate. The impact will depend on the personal circumstances of each recipient, for the tax year in which the payment is received. This payment might have an impact on child support, benefits or other such matters. Spark is not able to provide taxation advice. Any specific questions should be directed to the IRD or your financial advisor. The IRD website contains useful information on the tax treatment of lump sum payments such as a payment. You can also contact the IRD directly on 0800 227 774.
Spark did some leave recalculations and payments in 2016 – is this related?
In 2016 we completed a leave calculation review and discovered some inconsistencies with how our old Portal payroll system was calculating leave and pay entitlements under the Holidays Act. The 2016 review resulted in employees receiving payments for past leave calculation errors. There were also remedial changes made to the old payroll system in an attempt to bring it into line with Holidays Act requirements. However, our move to Ramco highlighted that due to the complexities of the Holidays Act (that many NZ businesses experience) those 2016 remedial changes were constrained by the limitations of our old technology in some situations. We have confirmed these challenges will not carry over into Ramco.
I received some money in 2016 – am I excluded this time around?
No – you will not be excluded. However, in 2017 we went back 2010 – 2017, and this time we are going back 2014 - 2017, so there will be a cross-over.
How would my payment be calculated if I worked for Spark, then left, then got rehired?
Each period of employment will be considered as a separate employment engagement and will be calculated separately and if you are due a payment, additional details will be provided based on the dates of employment.
How do I get in touch with you?
If you have any questions that have not been answered here, you can email your query to HolidaysAct@spark.co.nz