IR Payday filing UPDATE
Check out this link for full details on Payday filing. Many payroll software providers are yet to roll out Payday filing, so find out when your provider is expecting to go live and get prepared for the changes.
Employment Law Update
The Employment Relations Amendment Bill has progressed through Parliament and has now been passed. The Bill strengthens the legal rights of employees, limits the use of the 90-day trial period to businesses with fewer than 20 employees and gives more power to unions in the workplace. The changes come in to force on Monday 6 May 2019. We recommend you check your employment agreements, practices and policies are all compliant ahead of the changes. If you need assistance from an HR Consultant please call us and we will give you a referral.
Wages & Salary payments to employees when they fall on a Public Holiday
If pay day falls on a public holiday, employees must be paid on the last working day before the public holiday. If your employee is happy to be paid after the Public Holidays this is acceptable but remember all discussions with employees should be made in ‘good faith’.
Tax on Lump Sum Payments – Extra Pays
Lump sum payments include annual or special bonuses, cashed-in annual leave, retiring or redundancy payments, back pay, lump sum holiday pay, plus more. See more at: http://www.ird.govt.nz/payroll-employers/make-deductions/staff-benefits/bonuses/emp-ded-bonus-lump-sum.html
Tax on bulk payment of Holiday Pay – ALTERNATIVE APPROACH from 1 April 2018
Effective 1 April 2018 if you pay out several weeks Holiday Pay in bulk to an employee before they go on leave you can tax it on a lump sum basis (as per above) OR use the new ALTERNATIVE APPROACH. The Alternative Approach is to apportion the lump sum payment across the pay period(s) it relates to based on your employee’s regular hours of work, calculate the PAYE on the amount for each pay period as if it were the only payment made to the employee, then add the PAYE amounts together. Check out https://www.ird.govt.nz/payroll-employers/make-deductions/staff-benefits/holiday-pay/ for an example.
Paying Bonuses – Are they discretionary?
There is a lot of confusion around paying bonuses and implications on an employee’s leave rate. If the payment is not in an employee’s employment agreement the payment is a DISCRETIONARY PAYMENT. This will not be included in the gross earnings when calculating the value of annual leave. This may apply to a Christmas bonus, but check your employment agreement. ‘Discretionary payments’ are defined by MBIE on this page: https://www.employment.govt.nz/leave-and-holidays/calculating-payments-for-leave-and-holidays/gross-earnings/
Public Holidays – What is an ‘otherwise working day’?
It’s important to be able to work out whether a day is an ‘otherwise working day’ for an employee to work out their entitlements. Where it is unclear, an employer and employee must reach an agreement based on several factors.
Check out these links: https://www.employment.govt.nz/leave-and-holidays/otherwise-working-day/
An employee gets an Alternative Day for working on a public holiday that is an ‘otherwise working day’ (formerly known as a lieu day or day off in lieu). We recommend employees use the Alternative Day, where possible, soon after the Public Holiday worked. Want to know more, check out: https://www.employment.govt.nz/leave-and-holidays/alternative-holidays/