Secretary for Education Lesley Longstone said today that Talent2, the Australian company behind the plagued Novopay school payroll system, will face financial penalties.
Mrs Longstone told Radio New Zealand Talent2 would be held accountable but would not say what price it would pay.
"The details of that are commercially in confidence."
The Ministry of Education has a series of key performance indicators in its contract with Talent2.
Talent2 broke its silence this week when chief executive John Rawlinson met with school sector groups and apologised.
Mr Rawlinson would not say how much Talent2 was being paid for the first phase of the contract with the ministry, but it was believed to be about $100 million.
Mr Rawlinson confirmed on Radio NZ, he expected Talent2 would be penalised if they were found to breach key performance indicators.
He gave assurance the problems with the system would end.
"Eventually it will be a better, more efficient system."
Mr Rawlinson offended schools this week when he told Radio NZ schools were not "embracing" the new payroll system.
"The biggest challenge we've had was the sector wasn't ready to change. Paying the schools relies heavily on school administrators. They weren't able to adapt to putting the data in online.
"The system was too complex - the training that the ministry provided was online - we now know that not everybody was able to get the benefit out of that training."
The comments come as reconciliation for annual pay and leave for more than 8000 teachers on annual contracts are due, along with pay of other staff over the Christmas holiday break.
Up to 90 per cent of schools have been affected by pay problems since the system began and 70 per cent are still having problems.
Mrs Longstone said the ministry had a back-up plan if pay problems persisted - boards of trustees could use contingency funds to pay staff.
The Ministry of Education has so far called more than 1500 schools this week about their end of year payroll reports.
Ministry of Education group manager Rebecca Elvy said 83 per cent of schools had sent their reports in and the ministry would continue to call to help those schools that haven't completed them.
"The ministry is committed to ensuring the end of year payroll process goes smoothly for all schools and staff."
2005 - Talent2 wins tender for software system through a process described by Ms Longstone as open, competitive and following government best practice.
2006/7 - Ministry of Education decides to contract for the whole payroll service, not just the software
2008 - Talent2 awarded contract after second tender process
2010 - Talent2 supposed to have rolled out payroll system
2012 - $30 million Novopay payroll rolled out
- Kate Shuttleworth