McDonald's underpays staff 'up to $90 million' in holiday pay

Unite Union national director Mike Treen. Photo: Supplied via NZ Herald
Unite Union national director Mike Treen. Photo: Supplied via NZ Herald
McDonald's could owe an estimated 60,000 staff - past and present - "up to $90 million" in holiday pay arrears, according to the union that represents the company's workers.

Unite Union claims the fast-food chain owes 60,000 staff employed by the company in the past 10 years, and about 9000 current staff, a minimum of $500 each in arrears per year - though it anticipates this to closer to $1000 per year per worker, resulting in a combined total of between "$45-$90 million".

Mike Treen, national director at Unite Union, said the exact amount owed to staff was unconfirmed as McDonald's was yet to conduct a forensic audit.

A spokesman for McDonald's said it estimated around 40,000 staff had worked for the company over the past 10 years, not 60,000 as Unite Union claims.

"We think about 60,000 all together are affected because they have a two-thirds turnover. They have 9000 staff and turnover about 6000 each year," Treen told the Herald.

"My estimate is between $45-$90 million [is owed]."

The Ministry of Business, Innovation and Enterprise (MBIE) audited the fast-food giant in 2016 and found that it was one of many New Zealand organisations needing to change the way it calculates leave and holiday pay to fully comply with the Holidays Act 2003.

McDonald's has signed a memorandum to remediate annual leave. It has agreed to pay back arrears dating back to November 1, 2009.

McDonald's head of communications, Simon Kenny, told the Herald the company had not yet run individual calculations and did not know how much money was collectively owed.

"We have spent tens of thousands of hours working on what is a hugely complex project, in order to ensure the approach to making calculations is correct," Kenny said.

"With the agreement in place, we can now start the process of doing individual calculations. As other companies working on annual leave remediation have done, we will advertise when we have worked through the calculations and will have a website current and former employees can log into."

McDonald's is the latest company to get caught up in the Holidays Act, which has left thousands of workers shortchanged, and some government departments, including the police and correction, with large bills for historic underpayments.

McDonald's joins NZ Post, which last week announced it had set aside $38 million to pay back as many as 22,000 workers. Restaurant Brands, Bunnings, the Police and about 45 other employers that have incorrectly paid staff following confusion around the calculation of holiday pay.

"We think that most private-sector employers get it wrong, and most payroll providers have been getting it wrong," Treen said.

"We've come across this problem with nearly all the different companies we deal with."

Unite Union was dealing with similar holiday pay issues with Armourguard and Burger King staff, Treen said.

Six years had been seen by some companies as the maximum they were legally obliged to go back and repay staff in arrears, he said.

There have been calls for an overhaul of the Holiday Act from both business and the unions after confusion around the calculation of holiday pay in the past couple of years.

Workplace Relations Minister Iain Lees-Galloway announced a joint taskforce of Business NZ, the Council of Trade Unions and the Government to review the law in May last year. Recommendations have since been sent through to Lees-Galloway.

MBIE was first alerted to the "widespread issue" in 2016, and, as a result, audited about 150 of the largest employers in New Zealand.

MBIE has been contacted for comment.

Add a Comment







Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter