The following approach was used to recalculate the historical holiday pay for current and former HealthCare NZ.  This approach and examples of these calculations has been shared with the Ministry of Business, Innovation and Employment, who regulate a range of workplace areas including the Holidays Act 2003.

The historical holiday pay recalculation was completed over the period 28 May 2014 to 31 December 2020.  A second recalculation is also scheduled for the period 1 January 2021 to the date our payroll processes and system fully align with Holidays Act requirements.

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Calculate Gross Earnings

All holiday pay records have been recalculated for current and former employees using HealthCare NZ payroll data.  To enable this all HealthCare NZ paycodes over the recalculation period were reviewed to identify those paycodes to include in the recalculation of holiday pay rates.  These are referred to as gross earnings per section 14 of the Holidays Act.

Calculate Annual Holiday Entitlement

Per section 16 of the Holidays Act, employees are entitled to four weeks annual holiday after 12 months of continuous employment.  Because of the changing hours HealthCare NZ employees can work each week, our previous approach did not consistently provide, and correctly deduct, annual holiday entitlements.

The following approach was used to recalculate each employees’ annual holiday entitlements:

• For each pay period over the recalculation period, we determined if the employee had worked or had taken paid leave.  We then used these pay periods to identify when each employee reached 12 months of continuous employment
• Where an employee did not work or did not take paid leave for up to one week in each 12 month period, the 12 months of continuous employment date remained the same per the Holidays Act.  If however the employee did not work or did not take paid leave for more than one week, we extended, per the Holidays Act, the 12 months of continuous employment date by the number of whole or part weeks of unpaid leave greater than one week
• At each 12 months of continuous employment date, we provided the number of annual weeks annual holiday entitlement (e.g. four, five or six) contained in your employment agreement.  For example eight weeks annual holiday entitlement would be provided to an employee with two periods of 12 months continuous employment.  This identified the annual holiday entitlement earned over the recalculation period, and for those employees employed prior to the start of the recalculation period, we added these annual holiday entitlement weeks to their annual holiday entitlement at the beginning of the recalculation period
• This annual holiday entitlement was then reduced by the recalculated number of whole or part weeks annual holiday taken, and cashed up, across the recalculation period.  These annual holiday weeks taken and cashed up were calculated using the approach described in the Calculate Annual Holidays Taken and Cashed Up section below.

For employees who finished working at HealthCare NZ prior to 31 December 2020, your new annual holiday entitlement at termination has been recalculated.  Please refer to the ‘Calculate Holiday Pay At Termination’ section for further details.

For employees who continued to work at HealthCare NZ after 31 December 2020:

• If you are still working at HealthCare NZ at the time of your holiday pay payment, your updated annual holiday entitlement will be updated in our payroll system once we have completed the planned recalculation for the period 1 January 2021 to the date our payroll processes and system fully align with Holidays Act requirements.
• If you left HealthCare NZ after 31 December 2020, an updated final pay will be subsequently calculated, and paid, that uses your updated annual holiday entitlement.

Calculate Annual Holiday Weeks Taken and Cashed Up

Under the Holidays Act annual holiday entitlements are provided in weeks, however HealthCare NZ’s recorded annual holidays in hours.  In some situations the annual holiday hours entered did not reflect the number of whole or part weeks annual holidays taken, resulting in annual holiday entitlements being under or over deducted.

For each annual holiday we calculated the number of whole or part weeks annual holiday taken by:

• Calculating the average of total hours worked and leave taken in the four weeks prior to the annual holiday
• Calculating the average of total hours worked and leave taken in the 12 weeks prior to the annual holiday
• Calculating the average of total hours worked and leave taken in the 26 weeks prior to the annual holiday
• Selecting the higher of these three values to define ‘one week’, in hours, at the time of the annual holiday
• Dividing the annual holiday hours recorded by this definition of one week, for example 20 hours annual holiday taken / 40 hours definition of a week = 0.5 weeks annual holiday.

Note: If you had only worked up to four weeks in the recalculation period, the number of whole or part weeks annual holiday taken during these periods was calculated by using the total hours worked and leave taken in the week of the annual holiday to define a week.

Calculate Annual Holiday Pay Taken and Cashed Up

Considering the approach to record annual holiday hours, HealthCare NZ were not consistently paying the correct value of annual holidays. 

Annual holidays were recalculated by:

• Calculating and selecting the higher of following two weekly rates:
  • Ordinary Weekly Pay (refer below for further details)
  • Average Weekly Earnings, which was calculated by going to the end of the pay period prior to the annual holiday and summing your gross earnings over the prior 12 months.  This value was divided by 52 weeks, or the number of weeks worked if employed less than one year, to calculate an average weekly rate over the prior 12 months.  Note, AWE was only recalculated for corporate salaried employees who had been paid a gross earning that was incorrectly excluded from holiday pay calculations in the 12 months prior to an annual holiday
• Multiplying the higher of these two weekly rates by the number of weeks annual holiday taken.

The following approaches were used to recalculate the Ordinary Weekly Pay rate for each annual holiday record:

• The gross earnings paid in the pay periods prior to the annual holiday, and in the four weeks after your annual holiday, were summed to determine if there was an ‘ordinary week’s pay’, i.e. your pay prior to the annual holiday was consistent, or not
• Where your pay was consistent, the value of your weekly pay was used to recalculate your Ordinary Weekly Pay rate.  If your pay was not consistent, your Ordinary Weekly Pay rate was calculated by summing your gross earnings in the four weeks (or month for monthly paid employees) prior to the annual holiday and dividing by four weeks
• The following approach was used to determine whether your pay prior to the annual holiday was consistent or not:

OWP calculation	Weekly	Fortnightly pay	Monthly pay
Ordinary Weekly Pay rate, i.e. your pay prior to or after your annual holiday was consistent	This rate was calculated and used where your gross earnings were consistent over the prior four pay periods, or where only one pay period differs.  If your gross earnings however differed, the recalculation analysed your gross earnings in the four weeks after your annual holiday, and if consistent used this pay to calculate your Ordinary Weekly Pay rate	This rate was calculated and used where OWP gross earnings are consistent over the prior two pay periods.  If your gross earnings however differed for one fortnightly pay period, the recalculation analysed your gross earnings in the four weeks after your annual holiday, and if consistent used this pay to calculate your Ordinary Weekly Pay rate	Not applicable, i.e. this rate is not used as weekly data is not available for the recalculation to determine if you have an ordinary week’s pay
Ordinary Weekly Pay four week average rate, i.e. your pay prior to or after your annual holiday was consistent	This rate was calculated and used where gross earnings differ for two or more pay periods differ, and your gross earnings in the four weeks after your annual holiday differ	This rate was calculated and used where gross earnings differ for one pay period, and your gross earnings in the two fortnights weeks after your annual holiday differ	This rate was always calculated and used given data is not available for the recalculation to determine if you have an ordinary week’s pay

Calculate Bereavement, Alternative, Public Holiday and Sick Leave

Under the Holidays Act Bereavement, Alternative, Public holiday and Sick (BAPS) leave is calculated and paid using daily rates.  This requires detailed, daily data to recalculate, and whilst this data is recorded in HCNZ systems, e.g. Care Call, and is not available over the full recalculation period.  The following BAPS recalculation approach was used to manage this limitation.

• For all other employees, Average Daily Pay rates, described below, were used to recalculate BAPS leave.  This was because detailed, daily hours worked electronic data was not available over the full recalculation period, and it was not possible to convert paper timesheets into data
• Identify days worked and leave taken to enable the BAPS recalculation: Electronic days worked and daily hours are recorded in the Care Call system for one year of the recalculation period.  This data was used as a basis to estimate the number of days worked across each employee’s pay periods.  The recalculation summed all employees’ hours worked and leave taken in each week across the one year electronic daily hours is available, and identified a list of unique hours worked, e.g. 0.5, 1.0…22.5, 23…40, 42…70 across all employees.  For each of these unique hours worked and leave taken in a week, the average number of days worked per week across all employees was calculated, e.g.:

Hours worked and leave taken per weekly pay period	Average days worked and leave taken across the weekly pay periods where these hours were worked
0.5	1.0
1.0	1.0
…
22.5	3.0
23.0	3.0
…
40	5.0
42	5.0
…
70	7.0

• Calculate the number of whole or part BAPS days taken: The recalculation divided the BAPS leave hours with the total hours worked and leave taken in that pay period, and the multiplied by the number of days identified in the table above.  For example an employee who recorded 8 hours BAPS leave would have one day BAPS leave recalculated, i.e. 8 BAPS hours / 40 hours worked and leave taken multiplied by 5 days
• Calculate Average Daily Pay gross earnings: The recalculation went to the end of the pay period prior to the BAPS leave, and summed gross earnings over the prior 12 months, or back to the beginning of employment if the BAPS leave occurred in the first 12 months of employment
• Calculate days worked and leave taken in the prior 12 months: The number of hours worked and leave taken for each pay period in the 12 months prior to your BAPS leave was identified, and the average days worked and leave taken from the above table was assigned.  These days were then added up over the prior 12 months, or back to the beginning of your employment if BAPS leave was taken in the first 12 months of your employment, to identify the number of whole or part days worked or leave taken
• Calculate Average Daily Pay rate: The Average Daily Pay gross earnings was divided by the number of days worked and leave taken in the prior 12 months
• Recalculate BAPS pay: The Average Daily Pay rate was multiplied by the number of whole or part BAPS days taken, and compared to the BAPS pay originally paid to identify differences
• For salaried employees who work:
  • Less than 40 hours per week, your BAPS leave was calculated using the above approach; or
  • 40 hours and five days per week, your BAPS leave was recalculated by summing gross earnings in the pay period prior to your BAPS leave, dividing by the number of worked and paid leave days using the above table, and then multiplying by the number of whole or part BAPS days

Calculate Holiday Pay at Termination

The following holiday pay at termination was recalculated:

• Entitled annual holidays
• Notional public holidays
• Unused and unpaid alternative holidays
• ‘Accumulated’ annual holidays.

Calculate Entitled Annual Holidays

Entitled annual holidays are the number of weeks annual holidays you were entitled to at your last 12 months of continuous employment.

Entitled annual holidays at termination were recalculated by taking your updated annual holiday entitlement and multiplying by the higher of your Ordinary Weekly Pay and Average Weekly Earnings at termination.  Please refer to ‘Calculate Annual Holiday Pay Taken’ for a description of how these rates are calculated.

Calculate Notional Public Holidays

Notional public holidays are the public holidays you would have observed over the period from adding your annual holiday entitlement in weeks to your last day of employment.  These were identified by adding your annual holiday entitlement, in weeks, to your last day of employment, and identifying the public holidays, and the days of the week that they fell on during this period

These notional public holidays were calculated using the approach described in ‘Calculate Bereavement, Alternative, Public holiday and Sick leave’ section.

Calculated Unused and Unpaid Alternative Holidays

Unused and unpaid alternative holidays are those alternative days leave you earned from working on a public holiday, but did not take prior to leaving HealthCare NZ.  These are paid to you at termination.

Unused and unpaid alternative holiday were recalculated using the approach described in the ‘Calculate Bereavement, Alternative, Public holiday and Sick leave’ section.

Calculate Accumulated Annual Holidays

Accumulated annual holidays are the annual holidays you have accumulated since your last 12 months of continuous employment that you have not yet become entitled to.

The recalculation went back to your last 12 months of continuous employment date and summed all gross earnings, including your annual holiday entitlement at termination, notional public holidays, and unused and unpaid alternative holidays, and multiplied by 8%.  The value of any annual holidays taken in advance was subtracted, per Holidays Act requirements, from this value.

Managing Overpayments

Some recalculated holiday pay records had been undercalculated and HealthCare NZ will make payment to current and ex-employees to correct these issues.  For some records the recalculation identified some examples where HealthCare NZ had overpaid holiday pay during employment and at termination.  These overpayments:

• Were not used to reduce the gross earnings, of the value of total payments, included in the holiday pay calculations for the 12 months after the overpayment.  For example if an annual holiday record had been overpaid by $50, this $50 would continue to be included in the holiday pay calculations for the next 12 months
• Were summed the overpayments for each employee across each employment period and compared to the underpayments.  Where:
  • Overpayments were less than the sum of underpayments, the sum of underpayments were reduced by the sum of overpayments to identify the amount to be paid to each current and former employee. MBIE provides guidance on this situation here. HealthCare NZ is seeking your consent to deduct a genuine mistaken overpayment from your wages. You are not obliged to give your consent. If you have provided written consent to HealthCare NZ, you may vary or withdraw that consent at any time by giving written notice to your employer.
  • Overpayments were greater than the sum of underpayments, the sum of underpayments was set to $0 and HealthCare NZ will not seek re-payment from the employee for the additional calculated overpayments.