McDonald's Agrees to Pay a Decade's Worth of Back Pay to Potentially Tens of Thousands of Former Employees

McDonald's is investigating how it can pay out tens of millions of dollars to its past and present staff in New Zealand due to a faulty payroll system that incorrectly calculated holiday pay over the last decade.

The Unite union, which represents Kiwi workers at the fast food giant, said that more than 60,000 staff are due between 500-1,000 New Zealand dollars ($320-$640) in arrears per year they worked, which could result in a total bill of up to NZ$90 million ($57 million), Radio New Zealand reported.

The fast food chain is among a number of private and public organisations in New Zealand which miscalculated annual leave entitlements after legislation was changed in 2003. Up to 760,000 workers across the private and public sectors may be affected and the bill could run into the billions.

"This is a very significant step forward in fixing the mistakes that have been made around annual leave payments," Unite national director Mike Treen told Newshub.

"I estimate probably around 60,000 people have worked for McDonald's over the 10-year period that is going to be covered by this mediation process," he added.

Newsweek has contacted McDonald's New Zealand for comment. Its spokesman Simon Kenny said, according to Stuff: "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.

"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," he added.

McDonald's is going further than other companies in New Zealand, many of which will only backdate pay the legally required six years.

This is why unions are pushing for the government agency, the Ministry of Business, Innovation and Employment [MBIE], to intervene to ensure that other private sector companies pay workers holiday pay that they owe.

The backdated bill will pose a headache in some sectors, with health workers owed an estimated NZ$650 million ($416 million).

"McDonald's is not an exception in this regard. Nearly every company that's been audited by MBIE... has been found to be doing it wrong, and nearly every payroll provider," Treen told Newshub.

Earlier this month, McDonald's workers in the U.K went on strike over pay during a global day of protests which included workers in the U.S., Brazil, Germany and Chile, the BBC reported.

McDonald's New Zealand
People walk past a McDonald's fast food restaurant in Auckland, New Zealand, The fast food chain will pay out millions in back pay to workers for holiday it owed. Getty Images/Getty Images