All overpayments where the individual overpayment amount does not exceed $100, to a maximum of $300 in a calendar year, will be written off. They total between $200,000 and $300,000.
Minister Responsible for Novopay Steven Joyce said recovering the smaller overpayments would cost the Education Ministry more money than the amounts that have been overpaid and would slow down the clearance backlog.
Mr Joyce said he was committed to Novopay until at least June, and would not look at financial penalties for Talent2 until then.
"The long-term future of the system will stay under review.
"We've seen a very significant improvement on pay period to pay period delivery and some progress in clearing bugs, and on balance it wouldn't be sensible to make a change at this stage," Mr Joyce said.
Three out of the last four pay periods reviewed by PricewaterhouseCoopers had shown a reported error rate of less than 0.5 per cent, which he said was the reasonable error rate recommended by technical reviewers.
It's now nearly four and a-half months since Mr Joyce, also known as "Mr Fix-it", was sent into the Education Ministry to sort out Novopay.
In mid-March he delayed a decision on the payroll system after releasing findings of a technical review he had commissioned from Deloitte.
He told schools they would have to put up with up to two more months, but reserved the right to proceed with Datacom earlier if required.
In March schools were given $6 million compensation for the extra time administrative staff spent working with Novopay.
The technical review found 526 defects, 49 of them were classified as very serious, 320 serious, 115 moderate and 42 "cosmetic".
The review found Novopay was not properly processing annual leave and holiday pay, end of school-year payments, bulk leave and timesheet bookings, terminations, service accumulation and sick leave.
Deloitte found Novopay could be fixed if greater effort was made by Talent2 and the ministry.
"The work required to achieve long-term stability is therefore feasible but difficult," Deloitte found.
Sydney-based software designers Talent2 were signed up to replace school payroll provider Datacom by the Labour Government in 2008. Talent2 were paid $30m for the flawed system, which was due to be rolled out in May 2010 but was delayed two years.
Ministry and Minister Hekia Parata and Craig Foss had sufficient doubt, they signed a back-up contract with Datacom, yet in June 2012 went with Novopay.
In the last pay cycle administered by Novopay another 172 new defects were found with the system - since original bugs were discovered in February this year.
Data released by PricewaterhouseCoopers showed 363 defects had been fixed since February.
One of the major bugs resulted in 8500 staff having their end-of-employment date logged in the Novopay system as April 21 this year, the end of term one.
- Kate Shuttleworth of APNZ
