State secondary school teachers in New Zealand will seek compensation for the financial and personal suffering caused by an Australian-delivered payroll system.

Australian-based human resources company Talent2 is behind the Novopay system, which was rolled out by New Zealand's education ministry in August.

Since then teachers have been overpaid or underpaid by millions of dollars.

The Post Primary Teachers Association has 18,000 members. Its president Angela Roberts says lawyers are drafting a plan of action.

"We are looking for compensation for the hurt and financial suffering caused by this dysfunctional system," she said.

Ms Roberts says school staff are quitting because of the stress and schools are having to direct valuable resources away from teaching and into fixing payroll bungles.

Earlier this month the New Zealand government called an inquiry into the bungle after it was revealed that ministers signed off on the payroll system despite known faults and calls from within the department to scrap the contract.

Talent2 was privatised this year and is jointly owned by Morgan and Banks Investments Pty Ltd and the US-based Allegis Group Incorporated.