Warehouse lifts staff entitlements provision 37% with holiday backpay looming

Warehouse Group lifted its staff entitlements provisioning for 2017 by more than a third with the country's biggest listed retailer one of a number of big businesses trying to work out the impact of years of underpaying holiday pay.

The Auckland-based company's current provisioning for employee entitlements – which include annual leave and accumulated sick leave expected to be taken within 12 months – was $53.4 million as at July 31, up from $39.1 million a year earlier, its accounts show. The expected increase in holiday payments outpaced Warehouse's 4%  increase in its wage bill to $456.7 million, an amount implying holiday leave totalling $35.2 million.

Warehouse was one of 34 companies and agencies still under investigation by the Ministry of Business's labour inspectorate as at July 31 relating to miscalculated holiday pay dating back to a 2004 legislation change.

The Council of Trade Unions has released an MBIE document saying completed investigations led to 25 employers paying arrears totalling some $35 million to 26,000 staff. However, the 34 investigations still open include some of the country's biggest companies such as ANZ Bank New Zealand, Bank of New Zealand, Fonterra Cooperative Group, Restaurant Brands, Countdown supermarket owner Progressive Enterprises, Ryman Healthcare and Warehouse.

"How much money is owed to these working people is unknown but it seems likely to be tens of millions," CTU national president Richard Wagstaff said in a statement. "But how big is the problem? We believe that the problem is far bigger and that the government has only dipped its toe in the icy water."

The underpayments emerged earlier this year after the discovery of underpayments of staff at MBIE dating back to a 2004 change in the Holidays Act, before the super-ministry was formed.

Business New Zealand and the Payroll Practitioners' Association sought an urgent legislative review at the time but Workplace Relations Minister Michael Woodhouse has said it was difficult to reduce complexity without affecting entitlements although he was open to a more straightforward framework.

Other large entities under investigation include Auckland Council, the Auckland and Canterbury district health boards, the Department of Conservation, University of Otago, and New Zealand Post.

The payroll systems involved in the completed and current investigations include Xero, Datacom, Talent2, Pay Global, MYOB, iPayroll, Sage, and SAP.

(BusinessDesk)