Employer fined after breaching the Holiday Act

The company set up its payroll system in a way that resulted in non-compliance with the Holidays Act

Employer fined after breaching the Holiday Act

The Trotting Club has been fined $10,000 by the Employment Relations Authority (ERA) after failing to pay more than 50 employees their correct holiday pay.

It was found that the Trotting Club set up its payroll system in a way that resulted in non-compliance with the Holidays Act, following a labour Inspectorate investigation.

The company was taken to the ERA to ensure they fixed issues in their payroll system, according to the labour inspectorate regional manager, Jeanie Borsboom.

“The Trotting Club was originally issued with an improvement notice which gave it an opportunity to make necessary improvements and pay staff without a penalty being applied,” said Borsboom.

“However, the Trotting Club refused to cooperate and only did so once compliance action was commenced in the ERA by the Inspectorate.”

Borsboom added that this is a “clear message to employers” that the Labour Inspectorate expects employers to actively engage with their obligations as employers. A failure to do so will result in serious penalties.

“We strongly suggest employers take steps to understand their Holidays Act obligations, including with their advisors,” said Borsboom.

“They need to carefully assess whether any payroll system used is capable of complying with the Holidays Act and that their business systems continue to support that.

“Reliance on an electronic system alone with a ‘set and forget’ attitude will almost certainly result in non-compliance and risk penalties.”

There are a number of resources to help employers comply with the Holidays Act and New Zealand employment law, including detailed guidance on the Holidays Act and a checklist to assess payroll systems.

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