Imagine this: you’re an HR specialist, about to onboard a new hire for your organisation. It’s an exciting time, welcoming a new face to the company, helping them get situated and introducing them to the company culture. However, before the new employee can start doing the job they’re hired to do, you need to sit down and add their information to the current HR system. It should be easy, right?

But what if that’s just the payroll system? What if you also need to add them to the learning management system because they require the necessary training to get started? Then, they have to be added to the time and attendance system, too, since they need to clock in and manage their shift. Oh, and don’t forget the performance management platform, too.

Now, imagine having to add ten new employees to each of these platforms. What if you have to add twenty, thirty, or more?

This situation is not new, and we’ve heard it many times in our conversations with our customers. According to a 2024 report by Tomorrow’s People, 94% of surveyed organisations in New Zealand have more than one system supporting payroll, workforce management, and HR, with some even having up to nine platforms. While this piece-by-piece approach may seem cost-effective at first, it also introduces risks that can impact productivity, employee trust, and compliance, especially with something as complex as the New Zealand Holidays Act.

Few regulations create as many headaches for organisations across departments as the NZ Holidays Act 2003, especially given the dramatic changes in the workforce over the past two decades. The Act provides a framework for employees’ minimum leave entitlements, which may seem straightforward for full-time employees who work 9 to 5, five days a week, and receive annual salaries. But when you factor in variable workforces, which the Act isn’t designed for, compliance becomes much more complex.

It’s all about the data

When HR systems aren’t talking to each other, it’s easier for things to fall through the cracks.

Much about compliance with the Holidays Act revolves around the accuracy of employee data. The Act requires the following data for accurate computations: hours worked (including variable hours), gross earnings (including bonuses, overtime, and commissions), work patterns, leave balances, employee agreements, and job classifications. This is where the risk of disconnected HR systems comes into play: when these data points reside across multiple systems, there’s a higher risk that calculation errors occur.

Having multiple systems typically means that HR teams must manually enter data into each system, which requires regular reconciliation to ensure accuracy. Many teams end up relying on emails and spreadsheets, which gives birth to a wider range of issues.

While systems can be integrated with each other, this doesn’t always guarantee data accuracy, especially since they are still working off multiple databases. Synchronisation failures can still occur, or one system may be overlooked if data is not updated correctly or on time.

The cost of non-compliance

Many New Zealand organisations, including government agencies, have made headlines for the significant penalties they had to pay for failing to comply with the Holidays Act, on top of remediation costs that could stretch into millions. However, more than the financial impact, non-compliance with the Holidays Act can lead to legal battles, reputational damage, and disengaged employees.

Making technology work for people

Many of these issues of non-compliance are not done intentionally but are a result of the complexity of the legislation and the rapid changes in the world of work today. In the face of this complexity, disconnected HR systems are more than just an administrative headache – they pose a risk that organisations are better off without.

Investing in a single HCM platform that consolidates all people data into one solution can help reduce these risks dramatically. With a unified HR solution, all critical employee data is accessible from a single source of truth that brings a range of benefits to support compliance with the Holidays Act:

• Accurate, real-time data
  Having time, payroll, and leave management in one place can help ensure that every entitlement is based on the most current data, reducing the risk of calculation errors.
• Compliance management
  Modern HR systems can be configured to apply Holidays Act rules, eliminating manual guesswork automatically and helping ensure consistency. This can also aid in the proactive management of compliance in the event of reforms, and it can cost significantly less than addressing them after breaches have occurred.
• Improved reporting
  Real-time dashboards and audit trails can help HR and Finance teams be more confident in the accuracy of pay calculations, leave balances, and any entitlements.
• Less manual work for HR teams
  A unified platform can help save time for HR teams by allowing them to perform their tasks in one solution, eliminating the need for spreadsheets and documents and reducing the need for manual data entry and possibilities for mistakes. This lessens their administrative loads and frees them up for strategic, valuable work.
• Better employee satisfaction
  No amount of fancy events, flexible work practices, or wellness sessions matter if organisations are not paying their people correctly. When employees are paid correctly, they are more likely to feel valued and more likely to trust their organisation, leading to better talent attraction and retention in the long run.

While the New Zealand government has acknowledged the flaws in the Act and is working to resolve them, change takes time, and businesses have no choice but to comply with the current version of the Act. This presents a good opportunity for organisations to look into their current systems to understand how they could help manage compliance with the Act now, while maintaining flexibility for any reforms in the future.

Disconnected HR systems may seem manageable in the short term, but they introduce significant financial, legal, cultural, and operational risks over time. For organisations in New Zealand looking to attract talent, build sustainable growth, and manage compliance, investing in a unified HR solution isn’t just an upgrade – it’s a strategic imperative.

 

Discover more of the benefits of having a complete HR system right from the start. Download the Dayforce guide, Scaling your business with an all-in-one HCM solution.

 

Join James Saxton for a breakfast session hosted by Dayforce, “Future of HR in Aotearoa: Balancing Compliance, Culture, and Technology” at the NZ HR Innovation and Tech Fest on 26 June, 8:00 a.m.