Top 6 payroll mistakes employers usually make
Payroll is one of the most important tasks of running a business and can be pretty intimidating with the screeds of legislation to trawl through. For many NZ employers, organising it all can be a bit of a struggle – especially when trying to juggle complex government requirements, tricky leave calculations and Kiwisaver and paperwork.
We have compiled a list of the top 6 payroll mistakes employers make when employing staff:
1. Not having employment contracts for staff, or not having a signed contract PRIOR to employee starting work (you cannot enforce a trial period if an employment contract was not signed prior to starting work)
2. Not keeping a record of hours worked
3. Not having full records of any leave days taken, the types of leave and payment made for these
4. Not having any annual leave calculations used to work out annual leave entitlements
5. Not recording public holidays worked and the days in lieu owed from working these days
6. Not providing payslips – you need to be able to provide back dated payslips
Accurate payroll record keeping is of utmost importance. The Employment relations and Holidays Acts require employers to maintain and keep records of wages, time holiday and leave for their employees. These must be made available to employees and labour inspectors if they ask for them. They can be kept electronically or in paper files and must be kept for seven years.
Types of records that must be kept are:
- Time and wages records which includes:
- The employees name
- Age if under 20
- postal address
- type of work undertaken
- type of employment agreement
- hours worked each day including start and finish times and unpaid breaks
- wages paid each pay and method of calculation
- any employment relations taken
- Holiday and other leave records
- all requests must be in writing
- current entitlements
- dates of leave taken must be recorded
- amount of payment for leave taken
- calculation for payment of leave taken
- dates and payment for public holidays
- dates and payment for hours worked on public holidays
- any agreements to transfer of public holidays
- any requests for cashing up leave
- anniversary of leave details
- Other employee records on file should include
- a signed copy of contract
- letter of offer
- evidence that employee is entitled to work in NZ
- tax code declaration (IR330)
- job description
- personal profile
- application form
- emergency contact details
- details of bank account for wages to be paid into
This list is not exhaustive by any means and it can all be quite daunting. For more information on this essential area of business visit the Employment site or contact Ontrack Bookkeeping for support and more information.