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Is the point still being missed on Novopay?

Wednesday March 20th, 2013



We hear a lot from Government and school principals' spokespeople on Novopay. But why are we still not hearing from affected school staff about what is being done to exercise their rights?

All employees in every occupation in New Zealand have the right to recover wages under the Employment Relations Act 2000. The big story, surely, is why this is not happening.

The Government is not the employer in the Novopay fiasco. It has no duty to pay school staff under employment law. Nor does it have any liability for non payment.

Each school board of trustees is the employer. Nothing appears to be under way to recover payment by affected employees.

Therefore it is unrealistic to believe school staff unions can expect to any chance of success claiming compensation from Government under the employment jurisdiction.

If each individual school staff member took legal action for breach and recovery of wages the Government would have to pay more than $6million to liable school Boards to cover the cost.
- Phillip de Wattignar

Overpayment and Novopay

Wednesday March 20th, 2013

Last month I identified who had the legal status the liable employer in the Novopay school staff pay debacle. I noted that as recently as 2012 the Employment Court ruled that the Board of Trustees alone is the employer.

Therefore Novopay and the Government are not parties to the employment relationship. They owe no duty to school staff. The guarantee of correct and timely payment of salary and other payments to school staff is an employer responsibility for which Boards of Trustees alone are liable under their employment agreements with staff.

This gets interesting when it comes to a recent issue to come out of the long running Novopay saga. Novopay were apparently seeking to exercise the right to recover overpayments of wages to school staff.

The right to recover wages overpayments is strictly controlled by the Wages Protection Act 1983. Section 6 of the Wages Protection Act only permits recovery of wages in a specified manner. More importantly, it only permits employers to recover overpayment of wages. Novopay does not have any right to recover wages as it is not an employer. Only a Board of Trustees has the legal right to recover wages overpayments from school staff who have been overpaid.

Debt collection agencies cannot recover overpayments of wages unless they strictly adhere to the procedures set out in section 6 of the Wages Protection Act which, in this case, requires they hold the authority to act for each separate Board of Trustees.

Even then they would need to adhere strictly to the notification and deduction requirements of section 6. This is because, since the Wages Protection Act specifically provides a statutory process for the recovery of overpayments, it is most unlikely that any other debt or recovery process outside the procedures set out in the Act will be lawful or enforceable in the Court.

Copies of the relevant sections of the Act follow.

Wages Protection Act 1983

4 No deductions from wages except in accordance with Act
Subject to sections 5(1) and 6(2), an employer shall, when any
wages become payable to a worker, pay the entire amount of
those wages to that worker without deduction.

6 Employer may recover overpayments in certain
circumstances
(1) In this section,—
next pay day, in relation to any overpayment, means the day
next following the day on which that overpayment was made
upon which the worker to whom it was made would, in the
normal course of events, be paid
overpayment means any wages paid to a worker in respect of
a recoverable period
recoverable period, in respect of any employer and any
worker, means a period in respect of which that employer is
not required by law to pay any wages to that worker, by virtue
of that worker’s having—
(a) been absent from work without that employer’s authority;
or
(b) been on strike (within the meaning of section 81 of the
Employment Relations Act 2000); or
(c) been locked out (within the meaning of that subsection);
or
(d) been suspended.
(2) Notwithstanding anything to the contrary in any collective
agreement within the meaning of the Employment Relations
Act 2000 but subject to subsection (3), an employer who has
made an overpayment to any worker may recover the amount
of that overpayment from any wages to the payment of which
by that employer that worker subsequently becomes entitled.
(3) No employer shall recover an overpayment under subsection
(2) unless—
(a) by virtue of the methods or equipment normally used
by that employer in arranging the payment of, or paying,
wages to the worker concerned, it was not reasonably
practicable for that employer to avoid making that
overpayment; and
(b) before recovering that overpayment, that employer
gives that worker notice of that employer’s intention to
recover it; and
(c) that notice is given—
(i) not later than 10 days after the next pay day, in the
case of a worker who has no fixed workplace:
4
Reprinted as at
1 July 2003 Wages Protection Act 1983 s 7
(ii) not later than the first day upon which that worker
attends that worker’s workplace after the next
pay day during normal working hours, in the case
of a worker with one fixed workplace who did
not attend that workplace during normal working
hours on the next pay day:
(iii) not later than the first day upon which that worker
attends one of that worker’s workplaces after the
next pay day during normal working hours, in the
case of a worker with 2 or more fixed workplaces
who did not attend any of them during normal
working hours on the next pay day:
(iv) not later than the next pay day, in every other
case; and
(d) that overpayment is recovered not later than 2 months
after that notice is given.
(4) The validity of a notice purportedly given under subsection
(3)(b) shall not be affected by the fact that—
(a) it does not specify the amount of the overpayment concerned
but specifies only the day on which that overpayment
was made and the actions that led to its being
an overpayment:
(b) it is one of a number of identical notices given to a group
of workers to only some of whom an overpayment has
been made, and provides that it applies to the worker
to whom it has been given only if an overpayment has
been made to that worker.
- Phillip de Wattignar

Enthusiasm is not always a good thing………..more on Novopay

Wednesday March 20th, 2013



As the Novopay debacle drags relentlessly on, I wonder if anyone in government information technology (IT) circles is taking the lead of Harvard’s Kennedy School of Government and making Robin Gauld’s book Dangerous Enthusiasms compulsory staff reading.

In his first lecture as professor of health policy at the University of Otago, Prof Gauld explained that the book, co-authored by Associate Prof Shaun Goldfinch and first published in 2006, sought answers to why there is such a high failure rate of public sector IT projects.

It had achieved something ‘’ of a cult status in the IT industry’’,he said.


The Novopay saga had given the book renewed local relevance.
Based on the case studies in the book – including Waikato and Wellington hospitals which between them wasted at least $43 million, and the Police Incis system at over $100million – the authors developed a list of instructions for how to create a disaster called ‘’ eight habits for highly effective IT fiascoes’’.

They are:

1. Have an ambitious project scope – the more ambitious the better
2. Change technical specifications during the project
3. Develop a long and complex contract and assume this will solve problems that will arise (and they will)
4. Rely on advice and skills of salespeople and contract consultants, and don’t develop in-house IT expertise. Ensure many different consultants are involved so project knowledge is fragmented
5. Ensure project has long development time-frame, so technology becomes obsolete and increasing likelihood of agency organisational changes
6. Believe everything you are told about progress with the project; assume bugs will be ironed out once project is live
7. Look for key indicators of forthcoming failure. Do not terminate the project; instead, rely on reorganised management processes, tighter monitoring regimes, and promised technology/IT expert fixes
8. Continue throwing money at the project.


Prof Gauld says from what we know now, Novopay appears to be an all-time classic failure, with all eight habits practiced.


“ There was a reliance on contracts, an extended developmental timeframe, extremely ambitious project scope, use of many external consultants to provide advice and ensure that knowledge about the project was fragmented, an assumption that Talent2 – Novopay’s developer – could reliably deliver, and a failure to abandon the project at several critical points in its history when it looked as though all was not well.’’

Prof Gauld also referred to the ‘’four dangerous enthusiasms’’.
These are:
Idolisation – Public servants idolise IT and see it as leading to great benefits.
Technophilia – More and better technology prevents or fixes problems
Managerial faddism –New management or structures bring benefits and prevent or fix problems
Lomanism – Feigned or genuine belief of IT suppliers and sales staff in their company’s products.

Prof Gauld says these were evident in each of the cases explored in the book and “ again, from what we can see, also in the case of Novopay. What is surprising about Novopay is the lack of learning from prior IT disasters in the NZ public sector, or across government – as we now know that NZ Post also had problems with Novopay’’.


‘’It seems these enthusiasms continue to beleaguer public sector IT projects with sales people and companies aiming to get their foot in the door, oversell products and tidy up problems later to the expense of the taxpayer.’’

Lomanism gets its name from the infamous Willy Loman in Arthur Miller’s play "Death of a Salesman''.

‘’ Lomanism mixes rather cruelly with what we called managerial faddism, civil servant idolisation, and technophilia to create the perfect storm that leads to failure. ‘’

Prof Gauld said the book had come to the fore again recently in the United States as huge Federal Government investments in health IT had raised concerns about possibility of failures.

My hope is that all those involved with funding or developing health IT projects in New Zealand are paying close attention to all the points made by the authors .
- Elspeth McLean


And another minimum wage issue which hasn't been put to bed yet.....

Wednesday March 6th, 2013


You may have noticed this week the Public Service Association has been complaining about the length of time it is taking the Ministry of Health to sort out disability support workers sleepover backpay.

In 2011 the Court of Appeal upheld earlier findings by the Employment Court in the long-running case of Food and Service Workers Union member and disability support worker Phillip Dickson, ruling support workers were working on sleepovers and should be paid at least the adult minimum wage for every hour of their shifts.

The Sleepover Wages (Settlement)Act was introduced in October 2011 to provide the mechanism for the settlement of claims related to the Dickson case.

The Government allocated $27.5 million for the back pay, but both the Service and Food Workers Union and the PSA have been critical of bureaucratic delays in payment.

This week PSA national secretary Richard Wagstaff said the Ministry of Health (MOH) had told providers if they started paying the full minimum wage to their workers before the final Order in Council sign off, the Ministry will not reimburse them for its share of the sleepover backpay.

SFWU national secretary John Ryall said his union had two providers in this group.

“ While it is not really an issue for our members whose settlement agreementa have been signed off, the MOH attitude is picky and miserable for the funding of the providers concerned.”

Let’s hope it can be sorted out soon. However, it won’t be the last we hear on the sleepover issue.

The question of minimum pay for sleepover time is expected to go before the Employment Court again this year, this time involving workers in school boarding houses.



The workers from Iona College (Hawkes Bay) and Woodford House (Havelock North), represented by the Service and Food Workers Union, will be relying on the principles established in the Phillip Dickson and Idea Services Ltd case.

The boarding schools' case is the first one in which applicants have sought to apply the principles of the Dickson case outside the residential disability sector.

In October, the parties successfully sought to have the matter removed from the Employment Relations Authority to the Employment Court for consideration.

The schools stated their main defence was workers were not conducting ''work'' as that word was used in the Minimum Wage Act.
The joint memorandum from the parties said the case was ''likely to have ramifications in other parts of the education sector and other `sleepover' situations outside of the residential disability sector''.

Mr Ryall said the number of workers affected in boarding schools was probably 50 to 60 nationally.

However, if back pay became involved, as it was in the Idea Services case, there could be hundreds of workers entitled to claim some part of that.

- Elspeth McLean



Minimum wage workers and Kiwisaver............. the saga continues.

Wednesday February 27th, 2013


If you are on the $13.50 an hour minimum wage, can the employer take its 26c Kiwisaver employer contribution out of that?
No, said the Employment Court in a ruling late last year, but that decision is being appealed.
The court found the employer Terranova Homes & Care Ltd was in breach of the Minimum Wage Act in a case brought by the Service and Food Workers Union involving two minimum wage care givers.
Terranova had been deducting its employer 26c Kiwisaver contribution out of their gross pay, reducing it to $13.24 an hour.
The court found the employer’s compulsory contributions had to be paid in addition to the women’s gross salary or wages.
In its discussion of the issues the court said the purpose of the Minimum Wage Act (MWA) was to ensure workers received a base wage for their work to enable them to meet daily living expenses for themselves and their family.
“There is nothing to suggest that it builds in a component for saving for retirement. Rather it is designed to meet the basic necessities of day-to-day living.’’
The court concluded a deferred payment to an employee of a compulsory statutory employer contribution did not constitute payment by an employer for work performed by an employee for the purposes of the MWA.
Terranova had argued that under the Kiwisaver Act it was able to take a ‘’ total remuneration approach’’ incorporating the employer contribution in the caregivers’ pay and that this comprised payment for their work.
The court found that the section of the Kiwisaver Act relied on by Terranova did not refer to the Minimum Wage Act.
“It does not purport to deal with the way in which an employer contribution for an employee who is on the minimum wage is to be dealt with.’’
It did not state parties were free to agree to contractural terms and conditions overriding the minimum wage legislation.
Section 6 of the Minimum Wage Act ‘’expressly prohibits such an approach’’.
If Parliament had intended for employer contribution to be able to be deducted from the minimum wage, ‘’ we consider that it would have done so expressly’’.
For an employee on the minimum wage an employer was obliged to pay the 2% contribution in addition to the minimum wage or ( if the parties agree) the gross wage must amount to the minimum wage plus 2%.
Terranova has appealed the Employment Court decision and the Service and Food Workers Union has cross-appealed. The case is expected to come before the Court of Appeal this year.
We’ll keep you posted on this.
- Elspeth McLean

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