How New Zealand bus operators can manage the holidays act

Every bus operator, regardless of where they operate, needs to comply with employment legislation in their respective jurisdiction. Payroll systems need to be integrated across multiple depots for employee and roster data to remain up to date, ensure compliance, and accurately calculate leave, complex allowances, and other requirements.

However, in New Zealand, the Holidays Act 2003 (the Act) has become somewhat of a compliance minefield for employers, as it is notoriously complicated, and can be confusing. The calculations and processes required for Act compliance are often not understood by many employers, resulting in payment errors and unintentional non-compliance – which sometimes creates legal disputes with employees.

This article examines how implementing a tailor-made, bus-specific payroll solution, within an Enterprise Resource Planning (ERP) system simplifies managing leave payments regarding the Act and provides auditing capability.

What is the New Zealand Holidays Act 2003?

Originally, the Act was passed to help promote work/life balance for all employees in New Zealand[1]. It details how employers should pay staff for annual leave, sick leave, public holidays, bereavement leave, and other leave types. Unfortunately, this legislation is difficult to comply with if a working arrangement falls outside of the standard Monday to Friday, 9 am to 5 pm working week. Leave payment issues can arise when dealing with shift work, casual employment, and variable hours – the normal employment arrangement for bus drivers.

Other issues include new work arrangements, like an employee switching from full-time to part-time work. Automated payroll systems often use a ‘set and forget’ approach when calculating leave entitlements and often find it difficult to reflect real-world complexities. Compliance with the Act often requires manual interventions or multiple calculations, especially if leave is taken when working arrangements have changed from when the leave was originally earned.

The Act has received heavy criticism from employers and employees for being overly complex, making it challenging to apply in practice. The New Zealand government has also observed high non-compliance levels. Remediation processes to rectify the problem can be difficult and costly.

How the Act Affects Bus Operations in New Zealand

For bus drivers, it can be difficult to determine what constitutes a typical ‘workweek’ or a ‘workday’. Since bus driver shifts and hours regularly vary, it has been challenging for New Zealand bus operators to correctly determine leave payments, as multiple conditions are involved. For example, a bus driver might be rostered to work 40 hours per week but has worked between 50 to 55 hours per week over the past month. If the bus driver takes a week’s annual leave, do you pay leave at a rate based on:

• • Ordinary Weekly Pay,
  • Ordinary Weekly Pay 4 Week Rule, or
  • Average Weekly Earnings?

The correct answer is that the leave calculation needs to be the highest of these three amounts!

New Zealand Bus Operators

There have been instances in New Zealand where bus operators have incorrectly paid some of their current and former employees involving different pay types – including annual leave, alternate workdays, bereavement leave, sick leave, domestic violence leave and public holidays. These companies have had to recalculate these leave payments to account for under- and overpayments.

The Trapeze Payroll solution for New Zealand Bus Operators

Trapeze recently upgraded our ERP solution Payroll module to enable New Zealand bus operators to deal with the complexities of the Act.

The key Payroll solution benefits include:

• • Streamlined, automated, and auditable payroll processes.
  • Automated leave calculations and payments across all leave types, and
  • Management of the Holidays Act 2003.

The solution automatically transfers data from the Trapeze Roster and Dispatch module to calculate all staff payment types, including leave. It also delivers full visibility across the bus operation cost centres and provides a process for managing Act requirements.

Data granularity allows bus operators to provide precise leave payments easily from timesheets, with the algorithm providing leave payment calculations in line with the Act, with full visibility and reporting (Figure 1).

New Zealand Holidays Act 2003 leave payment calculations | Trapeze Group
Figure 1 New Zealand Holidays Act 2003 leave payment calculations in Trapeze’s TIMS ERP Solution

You can also specify any number of ‘Leave Groups’ for recording and monitoring the accrual, granting, and taking of statutory leave. The automation reduces the time spent replying to payroll or leave queries from employees. In addition, the Trapeze Payroll module automatically calculates multiple payroll transactions according to your chosen weekly, fortnightly, or monthly intervals (Figure 2).

Trapeze Bus ERP Payroll Module Fields
Figure 2 Trapeze Bus TIMS ERP Payroll Module Fields

The Payroll module can also calculate accurate termination leave payments. For example, if a public holiday falls within the leave payout period, it will automatically calculate leave rates based on what that employee would have accrued if they were working – and adjusts the leave payment. All leave payments can also be audited internally, and by regulatory authorities whenever required.

The Payroll module can be used together with the Trapeze Roster and Dispatch Module, or as part of a complete, dedicated, and proven bus ERP solution, which streamlines processes and information sharing across a bus operation.

The ERP solution provides a ‘single source of truth’, and helps manage:

• • Staff rosters and payroll.
  • Bus dispatch.
  • Vehicle maintenance.
  • Asset and financial management.
  • Inventory purchases and control.
  • Bus charter support (including school services).
  • Compliance with laws and regulations, and
  • Business analysis and reporting.

Future Holidays Act Changes

Because of the difficulties faced by employers, the New Zealand government created a Holidays Act Taskforce to investigate how the Act could become clearer and more transparent. The Taskforce made 22 recommendations that were agreed to by both union and business representatives. In February 2021, the Minister for Workplace Relations and Safety announced that the New Zealand government had accepted all recommendations[2].

This means that all New Zealand companies will need to update their payroll systems to meet compliance once the amendments come into effect, which is expected in 2022[3]. Employees such as bus drivers who work varied and unpredictable hours are expected to receive the most benefit from these changes. Trapeze will review these changes to the Act accordingly when they are passed.

Conclusion

While the Act has created issues for many bus employers, tailor-made bus industry technology can overcome these challenges, creating efficiencies for your payroll staff. Trapeze understands the operating conditions for New Zealand’s bus operators. We are committed to delivering technology that meets your requirements, and unique operating environment.

For more information on how Trapeze can help your New Zealand bus operation, please contact us.

[1] Holidays Act 2003 https://www.legislation.govt.nz/act/public/2003/0129/latest/DLM236393.html

[2] Improvements to the Holidays Act on the way https://www.beehive.govt.nz/release/improvements-holidays-act-way

[3] Holidays Act Review https://www.mbie.govt.nz/business-and-employment/employment-and-skills/employment-legislation-reviews/holidays-act-review/