MSD asked to mind accuracy, quality assurance after redundancy pay error

Social Development Minister Carmel Sepuloni. Photo / RNZ

By RNZ

The Ministry of Social Development has been reprimanded for its treatment of redundancy payments.

Social Development Minister Carmel Sepuloni said she had made it "very clear" to her ministry she expected the law to be accurately applied after people were wrongly denied the benefit based on redundancy payments.

Earlier this week, the Ministry of Social Development (MSD) released results from a review which found mistakes in nearly 9 per cent of a sample of recent cases where redundancy payments had been paid to new benefit applicants.

MSD said it showed there were "no systemic issues" but a benefit law expert said it was a "gravely alarming" figure.

Last week, Sepuloni said there were "isolated practice issues and that quality assurance could have improved".

She said when it was first raised with her last month she "directed MSD to look into it straight away - and they did".

"I have made it very clear to the ministry I expect them to be accurately applying the Act.

"The advice I have been provided with so far has given assurances that there were no systemic issues regarding the treatment of redundancy payments."

Sepuloni recognised errors had been made but backed MSD's approach.

"I know there have been instances where the practice did not reflect the policy. There is a high expectation that MSD get things right all the time. I have confidence that they are working hard to deliver on meeting this expectation."

She said MSD was taking a proactive approach to ensure that where errors had been made they were rectified, as well as identifying where improvements could be made.

"I have made it clear that I expect to be kept informed as this work progresses."

She would not divulge the potential cost of any errors or the historical nature of them.

RNZ has been inundated with people from around the country claiming they were affected, with some dating back to the early 1990s.

MSD has been contacted by more than 350 people with concerns about how they had been treated and these are being worked through.

Some, in Auckland, Christchurch and Palmerston North, said they had received back payments after challenging the original decision.

The issue first came to light after RNZ highlighted the case of an Auckland hotel worker, who was told she would have to wait months for a benefit because of her Covid-19 redundancy payout. Her case manager said it was the way she had been applying the rules for many years.

MSD admitted the error but it raised deeper issues because staff may have been wrongly advising applicants about the impact of redundancy on the benefit waiting time for decades.

Lawyers who work in the area said the issue could affect "potentially up to tens of thousands of people".