An additional $2.9 million will need to be sourced by Christchurch City Council to resolve a potential payroll blunder.
Earlier this year, the city council set aside $5.6 million to review the way it pays staff and address any potential back payments that needed to be made.
But council head of financial management Diane Brandish said there had been a misunderstanding around how to calculate bereavement, annual and sick leave, as well as public holidays, for some employees.
The cost has now risen to $8.5 million at a time when the city council is trying to cut back costs due to a shortfall of $99 million as a result of the Covid-19 crisis.
City councillors signed off on a revised draft Annual Plan last week, which proposes a preferred rates increase of 3.5 per cent and reductions to various services and the overall budget.
If the plan was not revisited and the shortfall left unaddressed, rates would have increased by a staggering 21 per cent.
City councillor and chartered accountant, Sam MacDonald, said the council is not alone when it comes to potentially being non-compliant with the Holidays Act, which outlines how employers pay staff.
“This has been driven by archaic Government legislation - it is important we get on top of it and [city council chief executive Dawn Baxendale] certainly is,” he said.
Last year, it was revealed more than 100,000 health workers across New Zealand were owed between $550 million to $650 million after mistakes were made by district health boards in leave and shift allowance pay.
New Zealand Post also had to set aside $38 million to pay up to 22,000 workers owed additional holiday pay.
McDonald’s was alleged to owe an estimated 60,000 staff up to $90 million, according to the union that represents the company’s workers.
Police were also forced to pay out $33.3 million after it was discovered staff were not being paid correctly for some statutory holidays, sick leave, annual leave and bereavement leave in 2016. About 15,750 police staff were impacted by the blunder.
