Talent2 has seriously breached its Novopay contract with
the Ministry of Education, which could legally wash its hands
of the failing payroll system, a contract law specialist at the
University of Otago's Faculty of Law believes.
Despite not knowing the full details of the contract between
the Ministry of Education and Talent2, law lecturer Prof Rex
Ahdar said there were clauses in every contract that allowed
''You can't terminate a contract for every little thing that
goes wrong - not for minor issues.
''But if one side is clearly in breach of a contract, then
the contract can be cancelled and the other side can contract
with whoever they choose.''
Prof Ahdar said there were two tests for serious breach of
''One test is where the parties have agreed that the
performance of the contract is essential to the ministry.
''In this instance, that means it is essential staff get paid
''The second test is whether the effect or consequences of
the breach are substantial.
''Either legal test appears to have been met,'' he said.
''It sounds like Talent2 have created serious breaches.''
The payroll system has been plagued with problems since it
was rolled out last year, including issues with overpayment,
underpayment, and non-payment of staff.
''Their [Talent2's] conduct could constitute a sufficiently
serious breach to enable the Ministry of Education to cancel
the contract,'' Prof Ahdar said.
''It also gives them the right to recover costs of damages -
that could be pretty huge.''
Prof Ahdar said he had followed the Novopay situation in the
media, but did not know enough about the contract to say
whether the ministry should ''bail out''.
''Should they give Talent2 another chance to sort it out, or
should they wash their hands of it and go with someone
else?''Only they [the ministry] can answer that. The law is
certainly in their favour.''
Erica Lloyd, communications director of the ministry's former
payroll provider Datacom, could not comment on whether the
company could reinstate the ministry's former payroll system.
However, she said the company was happy to be part of a
''constructive conversation'' with the ministry about that
possibility. The ministry advised school staff yesterday that
the next two Novopay pay rounds would have an increased
number of errors, but assured them it was working to resolve
issues as soon as possible.
The ministry also reminded schools it was able to make direct
payments to any staff member who was not paid or was
Issues were expected to arise from the start-of-year process
which involved thousands of staff who moved schools at the
beginning of the new school year, or who started work in a
school for the first time, and those who needed to rejoin the
payroll because they were not employed during the school
Ministry of Education workforce group manager Rebecca Elvy
said the education sector had been informed about the
increased potential for error. The ministry was testing a
solution to address the well-known issue with inaccurate
banking/staffing reports, which was expected to be ready for
release in the next couple of weeks, she said.