An Auckland packaging company underpaid the holiday pay of its employees for more than two decades [1].
The failure to accurately calculate leave entitlements highlights systemic payroll errors that can impact worker earnings over long periods. Such discrepancies often stem from a misunderstanding of how allowances integrate into base pay for holiday calculations.
According to reports, the firm failed to include shift allowances when calculating the holiday pay owed to its staff [1]. This omission resulted in workers receiving less than their legal entitlement for more than 20 years [1].
Payroll errors of this scale typically occur when companies apply a static base rate to leave instead of the average weekly earnings, which include regular allowances. In this case, the shift allowances were omitted from the calculations entirely [1].
The company operates in Auckland, New Zealand, and the underpayments spanned a significant portion of the business's operational history [1].
While specific monetary totals for the underpayments were not detailed in the initial report, the duration of the error suggests a wide range of affected current and former employees [1]. The company is now addressing the shortfall after the error was identified [1].
“An Auckland packaging company underpaid the holiday pay of its employees for more than two decades.”
This case underscores the complexity of New Zealand's holiday pay laws, where 'ordinary weekly pay' must include various allowances. For employees, it demonstrates how subtle payroll errors can lead to significant cumulative losses over decades. For businesses, it serves as a warning that historical payroll audits are necessary to avoid long-term liability and legal repercussions.
