Hardware store chain Bunnings will pay back $NZ11 million ($A10 million) it owes to New Zealand staff whose leave payments were underpaid.

The Australian-owned chain is the latest in a string of companies to make back-payments to past and present staff over confusion about how New Zealand’s holiday payments law works.

Bunnings on Monday said it would be giving 12,235 workers back a median sum of $NZ317 ($A296) for underpayment of leave from April 2004 to May this year.

“Like many other private and government organisations, we have found interpreting and applying the Holiday Act to be a challenge,” Bunnings NZ general manager Toby Lawrance said in a statement.

The Holidays Act has been a problem for Kiwi businesses and government departments since a report in 2016 found tens of thousands of workers were being shorted.

The confusion is over two different methods that can be used to calculate leave payments.

Workplace Relations Minister Iain Lees-Galloway last month announced a review of the law.