Payroll – Keeping Accurate Records
Most business owners are not aware of the rules around keeping the right records for payroll. Employers must keep complete and accurate records of wages, time, leave and other details to comply with the Employment Relations Act 2000 and Holidays Act 2003.
While all the record-keeping requirements may not seem necessary, they’re needed to show a clear picture of each day in an employee’s working year, that is, which days were worked, not worked, on leave and what type of leave, and so on. This information is used to calculate different types of pay for such leave as annual holidays or sick leave, and entitlements such as parental leave.
What happens if an employer doesn’t keep accurate records
If an employer doesn’t keep all the accurate wage and time, holiday and leave records as required by the Employment Relations Act 2000 and the Holidays Act 2003:
- the Employment Relations Authority (ERA) or a Labour Inspector may give them a penalty. This could be up to $50,000 for an individual; or for a company, the greater of $100,000 or three times the amount of the financial gain made, or
- a Labour Inspector can issue an infringement notice for breach of the record keeping requirements (an infringement offence).
Records that employers must keep for each employee
Name, postal address, age (if under 20 years) and the date they started working.
- If they’re on an individual employment agreement or a collective agreement (and the title and expiry date of the agreement and the employee’s classification) and a copy of the agreement.
- The kind of work they are employed for.
- The number of hours worked each day in a pay period and the pay for those hours. If these are agreed and they work them as usual hours then a statement of those usual hours and pay will be enough. This can be recorded in:
o the wages and time record
o employment agreement
o a roster, or
o any other document or record normally used during employment.
Records that employers SHOULD keep
- Records of all wage deductions, such as PAYE, student loan deductions and superannuation contributions, and any agreements for wage deductions.
- Requests to transfer public holidays (and whether or not these were agreed to).
- Requests to cash-up annual holidays (and whether or not these were agreed to).
- Dates that any extra provisions in employees’ employment agreements take effect.
- Records of the date employees become entitled to sick and bereavement leave (to avoid disputes).
- Evidence of compliance with health and safety responsibilities.
- Evidence of rest and meal breaks provided (or compensation for these).
- Copies of employees’ personal contact details, such as their email addresses, home phone and mobile numbers, if they want to provide these.
- In case of emergency (ICE) contact details.
- Employees’ bank account details if this payment method has been agreed to.
- Details of employees’ work permits, if applicable.
- Keeping accurate records is easier if employees fill out timesheets.
- If an employment agreement (or workplace policy) says that employees need to fill out timesheets this can’t be changed unless the employer and employee agree.
- If an employee doesn’t put in timesheets correctly as agreed, this doesn’t mean they don’t get paid. In this situation, the employer and the employee should try to agree on what to do.
Ways to keep records
- Keep records on paper or electronically (as long as the information can be accessed easily and converted into written form).
- Keep wages and time records, and holiday and leave records for seven years (even if the employee has left).
- Keep a signed copy of the employment agreement, or current signed terms and conditions, or intended employment agreement (and employees must be given their copy if they ask for it).
Information curtesy of Employment.Govt.NZ