Unforeseen issues caused by Novopay

16:00, Jan 26 2013

The teachers' pay scandal has had knock-on effects which have hit many hard.

When a staff member is not paid for months, Novopay puts through a bulk payment comprising all owed wages, as a single transaction.

However, the system treats that bulk payment as a regular fortnightly payment and readjusts the level of tax, pushing it over one and in some cases, two, tax brackets.

This means the staff member is paid significantly less than had they been paid on the fortnightly basis. To recoup the money, they must file a tax return with Inland Revenue at the end of the financial year.

This will be particularly difficult for many teachers because their Novopay payslips are riddled with errors.

Ashburton College principal Grant McMillan has experienced significant and problems from the outset of Novopay, the most ludicrous just before Christmas when Novopay took $40,000 directly out of the school bank account to pay a number of teachers who had never worked at the college. "As far as I am concerned, [Novopay] have stolen $40,000 out of our bank account," he said. And because those teachers were paid a bulk sum, it pushed them to a higher tax bracket so they didn't receive as much money as they should have. McMillan wants his school's money back but asked how those teachers would be able to pay back a combined $40,000, when in reality, they received less than that because of paying more tax.


Part-time teacher Kate Syme was underpaid by at least $120 each pay period for two months between August and October. To make matters worse, she was not sent a single payslip. Hours of work and countless emails secured her a bulk payment and four payslips. "I got about four payslips in a row and they were absolutely bizarre," she said. Two were blank and the others showed "complete gobbledygook. I cannot understand why this is allowed to go on", Syme said.

Benefits Another unforeseen side-effect of bulk payments and incorrect payments is staff losing benefits.

Some part-time staff are paid a government benefit. However, they are entitled to benefits only if they are earning under a certain financial threshold. A bulk payment pushes them over the threshold, into a higher tax bracket and out of the benefit payment.

Payment schemes A serious glitch in the Novopay system is the non-payment of ACC levies, child support, KiwiSaver, superannuation and student loans.

The Sunday Star-Times understands that these deductions are made from wages and shown on payslips. However, the payment does not end up with the correct recipient.

Beaconsfield School principal Wayne Facer, from his home in Timaru, has co-ordinated a database of hundreds of principals throughout the country who are experiencing Novopay problems.

"I've heard of teachers who have had their benefits cut," he said. "There is one who had child support payments stopped. You can imagine how his ex-wife took that."

One teacher, who wanted to remain anonymous, said she noticed "huge" amounts of student loan being incorrectly taken out of her pay.

She called Inland Revenue who sent her an account of her student loan repayments.

"Guess what, they haven't received it," she said.

"Inland Revenue say I have paid less than half what has been taken out of my pay." Pay grades Teachers have a 12-step pay grade, ranging from about $36,000 at level 1 through to about $71,000 at level 12.

A Novopay "fix" for weeks of non-payment has been to create a new identity for teachers in the system.

However, this fix wipes out the pay grade, taking the teacher back to level 1.

In order to re-establish their correct pay, teachers must have copies of their qualifications and a letter of endorsement from their school signed by a Justice of the Peace and verified by the Ministry of Education. Only then will Novopay readjust their pay.

Sunday Star Times