Hon Dr David Clark
Minister of Health
 

8 October 2019
  PĀNUI PĀPĀHO
Government putting right Holidays Act underpayment in Health
 

The Government is putting right a decade’s worth of underpayment to nurses, doctors and other health workers, says Health Minister Dr David Clark.

Initial sampling of District Health Boards payroll records has found that around $550-$650 million is owed to DHB staff to comply with the Holidays Act. It’s expected to take up to two years for DHBs to review and rectify this historic issue.

“Over 100,000 highly skilled and dedicated health workers, both current and former staff, have been short-changed over many years. But this Government is putting things right,” David Clark said.

“Many organisations have been dealing with the issue of how to identify and rectify Holidays Act non-compliance, but in Health the National government did nothing.

“We make no apologies for addressing this long term challenge we have inherited. We have instructed DHBs to work with unions to resolve this issue and ensure workers are fairly recompensed.

“I know DHB staff will want to know what this means for them and their family. It will take some time to give individual workers clarity about their situation and the timetable for repayments.

“I can assure our health staff that resolving these historic pay issues is a priority for DHBs working alongside unions. Our doctors, nurses, allied health workers and other staff deserve no less.”
 

DHBs, the CTU and the Labour Inspectorate have agreed a Memorandum of Understanding which sets a national process for DHBs to identify and rectify the historic Holidays Act 2003 non-compliance.

“This is a complex and time intensive task. By its very nature, health work is a 24/7 proposition. There are over 100 different collective agreements and a range of rostering, allowances and overtime provisions which have changed over time.

“It’s going to take 12 to 24 months for DHBs to rectify this issue and remediation costs will be staggered. Any further funding required will be dealt with through the usual cost pressure budget process.

“DHBs have included the estimated cost of Holidays Act liabilities in their end of year financial reporting, although a few DHBs are still to make comprehensive cost estimations. A substantial extra one-off cost is therefore included in the end of year results, taking the sector wide deficit for 2018/19 to $1.081 billion. 

“More than half of that, $666 million, is due to one-off costs - $590 million for Holidays Act compliance; $32 million as a result of the Resident Doctor strikes and $44 million for the previous National Oracle Solution project.

“The underlying deficit result is $415 million, compared to a budgeted result of $340 million – that’s a $75 million or 22 percent variance which is in line with the year end results for the last two financial years.

“Four DHBs (Canterbury, Waikato, Counties Manukau and Southern) account for most of the underlying deficit - $268 million in total, that’s 65 percent.

“While it will take time for some DHBs to reach a breakeven position, it can be done. Nine DHBs ended the year with a result close to budget or an improved result (excluding one-off costs).

“I have strengthened financial management at the DHBs with the largest deficits. There is now a Commissioner at Waikato DHB, a Crown Monitor at Canterbury DHB and I intend to appoint a Crown Monitor to Southern DHB. A Crown Monitor continues to support Waikato and Counties Manukau DHBs,” David Clark said.

The DHB sector unaudited financial performance report for the year 2018/19 is available on the Ministry of Health’s website: www.health.govt.nz

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