Background

Like a number of New Zealand organisations, through an initial assessment, Tower has identified payroll issues that mean some of our past and present employees in New Zealand may have had their leave payments calculated incorrectly.

The issues are due to challenges with the application of the Holidays Act 2003 and relate to the rate of payment for annual leave, bereavement leave, alternative holidays, public holidays and sick leave.

As a result, some employees will have been underpaid and are entitled to a remedial payment.

To ensure that our payroll system is correctly set up for the future, and remedial payments for underpayments have been identified, Tower has appointed Deloitte, who have a team that specialises in this field of expertise, to conduct a comprehensive review. Their role is to analyse all relevant payroll calculations for the period from 30 August 2013, identify changes to the system configuration and provide values for any reimbursements.

What are the issues?

The issues relate to incorrect payment calculations for bereavement leave, alternative holidays, public holidays and sick leave – known as ‘BAPS’ days and, in some cases, annual leave, leading to underpayments for some employees:

1. Payments for BAPS days

Under the Holidays Act, a Relevant Daily Pay calculation is used to determine the pay an employee would have received if they had been at work and should include payments such as overtime. The payroll system did not include overtime as part of this calculation.

2. Payments for annual leave

When calculating annual leave payments for some employees, the payroll system paid the greater of two different Holidays Act calculation amounts (either an employee’s ordinary weekly pay or their average weekly earnings). However, under the Holidays Act, a third calculation should also be considered if an employee’s ordinary weekly pay is not clear. The payroll system did not include this calculation.

Timeline

We acknowledge that this is a very complex and detailed piece of work to complete to the satisfaction of MBIE, and we also want to make sure that we get it right, so based on the current estimates, we are focused on commencing payments from April 2021.

Former employees


If you receive a notification that you are due a payment, then please complete the former employee form for us to be able to process the payment through the payroll system.

Frequently Asked Questions 

Who may be impacted?

Some employees who were employed at Tower New Zealand from 30 August 2013.

What period does the review cover and why?

Most impacted employees will receive a reimbursement for the period from 30 August 2013 to either the date:

  • the issue was resolved within the system for current employees, or
  • the last day of employment for ex-employees.
Why is our pay only being backdated to August 2013 when the Holidays Act has been in place since 2003?

An action for payment of arrears under s 131 of the Employment Relations Act is subject to a six-year limitation period from the date on which Tower first became aware of the issue, which was August 20189.

Is there a minimum amount that will be reimbursed?

No, we are both legally and morally obliged to ensure you receive any payment owing to you.

What is the Holidays Act?

The Holidays Act 2003 sets out how payments for leave and final pay are to be calculated and paid.

What happens if the outcome of the review shows that I received an overpayment?

Tower acknowledges that all payments were made in good faith. We accept responsibility for any overpayments and will not be seeking to recover those overpayments.

How will I know if I am entitled to a reimbursement?

Not every past employee of Tower will be due a payment. We will send out an email to all past employees who are identified as being due a remediation payment as soon as we have the final figures and all system changes have been made.

What documents will I need to provide to receive my payment?

As part of the payment process, we will need to validate who you are by asking you to confirm certain details and also provide us with a copy of your driver's license, current passport, birth certificate, or HANZ 18+ card. We will also need you to complete a tax code declaration document (IR330) and KiwiSaver deduction form (KS2) to confirm the appropriate deduction rate.

My bank account has recently changed. How can I change it?

You will be able to provide your new details when you submit your details. 

Am I able to have any remediation payment made to a family member or friend?

Unfortunately, we are only able to make a payment to an account in your name or your name and someone else's if it is a joint account.

Why do past employees need to complete a form or send documentation?

To ensure you receive the reimbursement, we must obtain proof of identity. Information relating to your KiwiSaver, taxation and bank account details (if changed) are needed to be able to process your payment.

How much will the reimbursement be?

Everyone's earnings history and leave patterns are unique and, as such individual calculations for each employee will need to be assessed. As a result, each reimbursement is unique and Tower will write to each of the affected employees and advise of the amount that will be reimbursed.

How will the remediation payment affect my tax and any other benefits?

If you are a current employee, you will be taxed in accordance with Inland Revenue regulations and using the tax code we currently hold for you. 

Former employees will be taxed in accordance with Inland Revenue regulations using the tax code you provide to us in an IR330 form.

We encourage you to discuss with the relevant organisations how your remediation payment may impact child support, benefits or other such matters you may receive.

Are KiwiSaver contributions deducted from any reimbursements?

If you are a KiwiSaver member, then any reimbursements will be subject to both employee and employer deductions to ensure the correct employee and employer contributions are paid into your KiwiSaver account.

Will reimbursements include interest?

No. Tower is not legally obliged to pay interest or compensation.

Can I request that my payment is made into an overseas bank account?

Unfortunately, we can only make a payment into a New Zealand bank account.

Why will it take so long to organise these payments?

We appreciate that this process will take time to complete, however our focus will be to ensure the calculations are as accurate as possible. We have taken all possible steps to ensure we get this right, while ensuring compliance in the future. The issues are complex and affect thousands of employee records, so it will take time to work through all the data and ensure we have been as accurate as possible.

How do I claim on behalf of a deceased person, or someone for whom I hold power of attorney?

We will need you to provide documentation to verify your identity and to confirm that you are authorised to act on behalf of the estate. If you are the authorised person for someone who has died and who left Tower during this time period, please contact us at holidayact@tower.co.nz. 

How will you know that this won't happen again?

We have been working with an independent third party who has vast experience in this field to ensure that the configuration of the payroll system is compliant with the current legislation.