Talent2 and the Ministry of Education have agreed that the management and operation of the Novopay payroll service will transition from Talent2 to a new government owned company on 17 October 2014.
The decision has been reached by mutual agreement in support of a new service delivery model and settles a flawed contractual arrangement between the parties, which was found in the June 2013 Ministerial Inquiry as not fit for purpose.
Under the new arrangement the government will assume full responsibility for the provision of the education payroll service. The Ministry intends to retain the skills and expertise of Talent2's Novopay employees in the new government owned company, according to a statement.
Talent2's Alesco software will continue to be used by the government owned company to process the Ministry's payroll under a six-year license arrangement.
A total settlement package of NZ$18-22M has been negotiated with the Ministry. The negotiated package includes a cash payment by Talent2 of NZ$7M, a transfer of assets including Novopay customisations and other IP previously funded through the existing contract and a discounted software license.
The Ministry has a support and maintenance contract with Talent2 for the Alesco Software under which the Ministry is expected to pay Talent2 fees totalling NZ$9.6M over a six-year period.
Talent2 also has a contract that covers transition and the completion of certain objectives prior to the transfer.
Talent2 will retain operational responsibility for the Novopay payroll service through the transition period from now until 17 October.