Novopay

[8] During the period the Novopay contract was being negotiated with the Government, the company was having financial problems[9] and was later delisted from the Australian stock exchange.

[2] Prior to adopting Novopay, the payroll for 90,000 teachers and school staff nationwide had been managed for the Ministry of Education by Datacom Group.

When Steven Joyce was appointed to sort out problems with Novopay in 2013, he initiated discussions with Datacom in case the contract with Talent2 had to be scrapped.

The Australian company was awarded the NZ Post contract in 2010 to create a centralised payroll programme to replace the existing regional system.

[12] EPMU national industry organiser Joe Gallagher described the new NZ Post payroll as a "dog" of a system and said: "We had workers overpaid, underpaid, not paid, you name it, we had it.

[14] Once the contract was signed, Novopay was meant to go live in May 2010 but the company missed a number of deadlines which delayed the rollout by more than two years.

[22] Concerns were raised that Novopay also committed breaches of privacy by giving teachers' personal information, including bank account details, to the wrong schools.

Opiki School principal Bede Gilmore said "the breach showed there was opportunity for fraud on a huge scale".

[30] By February, the Ministry had received 225 invoices for extra administration costs (for which then Associate Education Minister Craig Foss had promised to compensate schools) totalling nearly $1.2 million.

[6] In November 2012, retail banks across New Zealand made the extraordinary step of offering school staff interest-free overdrafts after many employees missed out on being paid for up to four months.

[32] On 15 November the Ministry of Education said it would be taking legal action against Talent2, seeking financial compensation for the errors, which would be used to pay teachers.

[34] In 2013, it was revealed that Longstone received severance pay of $425,000 after only 13 months into her five-year appointment[35][36] and had been paid $50,000 to relocate from Britain to New Zealand to take the job.

[38] Despite Mr Rawlinson's claims, the Government subsequently paid Talent2 another $5 million to produce software upgrades, the first of which went into operation in February 2013.

With intense scrutiny on the system, in 2013 additional reporting was put in place, including media releases after each pay round.

[39] In January 2013, the Sunday Star-Times revealed that mistakes by Novopay have begun to involve other government departments and "spawned a number of serious side-effects" that have misdirected ACC levies, child support payments, superannuation funds, KiwiSaver and student loan payments which are not getting through to the right account – despite being debited from teachers' payslips.

These teachers will not be able to get back their lost pay until they file tax returns at the end of the financial year – but with their payslips now full of errors, this may be very difficult.

[26] Another issue is that schools are now facing annual audits with their bank accounts so depleted, they have had to put Novopay down as a debtor.

To be repaid wages owing to them (in their original identity), teachers have to provide Novopay with "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".

[26] At the end of February a survey of principals found 23 admin staff have already resigned, and as many as 50 may have quit over the ongoing problems with Novopay.

[41] President of the PPTA Angela Roberts said schools were yet to receive any financial assistance from the Government for all the extra hours staff spent sorting out the problems.

[43] In March, further concerns arose when it was reported that Novopay had called in debt collectors to get back overpayments made to teachers,[44] even for as little as $22.

[48] Mr Joyce was initially reluctant to discuss the various options being considered by the Government but indicated that scrapping Talent2's contract was possible but unlikely.

[49][50] Two weeks later, after talking to the stakeholders including Talent2 chief executive, John Rawlinson, Mr Joyce changed his tune and said the system might be scrapped.

[52] In early February, Mr Joyce released hundreds of documents which showed the Ministry and Talent2 had a testy relationship prior to the national rollout of Novopay.

[11] The documents show the Ministers who gave the go ahead to roll out Novopay were aware of its deficiencies and the Ministry of Education almost abandoned the system four months before it became operational.

One of the documents released was a memo written by Lesley Longstone and her deputy Anne Jackson stating four deadlines had been missed by Talent2 and they warned the company it was in breach of its contract.

[13] Steven Joyce and acting Education Secretary Peter Hughes also began a dialogue with Datacom, the previous payroll provider about creating a contingency plan in case Novopay had to be scrapped.

It seems the lack of senior executives meant the company was unable to make decisions about increasing its financial investment to bolster the service when it got into difficulty.

A couple of weeks later Mr Joyce provided an update on his investigation into Novopay and said "Talent2 had been issued with formal notices of a breach of contract and key performance indicators".

[54] However, the errors continued leading the Post Primary Teachers' Association to launch group legal action seeking compensation for "the hurt, humiliation and financial suffering caused by the dysfunctional payroll system".