Your guide to payroll compliance and fair pay legislation
Changes to payroll compliance in New Zealand
In recent years, the laws around payroll in New Zealand have undergone significant changes. Fair pay legislation has been introduced, the minimum wage has been raised, there have been changes to KiwiSaver rules, and parental leave rules have been adjusted.
As an employer, it’s crucial you ensure your payroll processes comply with the latest regulations. In this guide, you’ll gain actionable insights and strategies to remain compliant while optimising payroll processes for maximum efficiency.
Here’s what the updates mean for your business:
The new minimum wage
As of 1 April 2023, the adult minimum wage was lifted to $22.70 per hour. However, employees just starting or in training can be paid at a lower rate ($18.16 per hour) under certain circumstances. Migrant workers are entitled to these same minimum wage rates, regardless of origin or immigration status.
Note that the minimum wage in NZ has increased annually since 2017. It’s a good idea to go back and check this number regularly to make sure that your pay rates are compliant.
Recent changes to KiwiSaver
The KiwiSaver scheme often gets updated, and staying informed is key to meeting obligations and providing accurate information to your employees.
In 2022, there were three updates you need to be aware of:
Employees can now update their contribution rates independently
While employees used to update their contribution rates through their employer, they can now manage the process themselves through IRD’s myIR service or their KiwiSaver provider. If one of your employees changes their contribution rate, you will receive a notification from IRD.
In that case, you must update your payroll systems to reflect the new contribution rate. Otherwise, you may not be deducting the correct contributions from their pay.
Employer contributions can now be returned
If your employee opts out, but you have already made contributions on their behalf, that money will be used to cover any outstanding balances they owe. After that, if you have contributed more than the amount owed, the excess will be refunded.
Updating employment information is now restricted
You can no longer change employment information through myIR or Gateway Services if it’s been over four years since the return was filed. Once it hits the four-year mark, the information will be locked in, so always double-check records before filing.
Employment legislation changes
In 2022 we saw the most significant change to New Zealand employment law in modern history. Here’s what you need to know:
Fair Pay Agreements Act gives employers a voice
On December 1st 2022, the Fair Pay Agreements Act was passed. It aims for relevant parties to agree on how much people get paid and what kind of work conditions they should have in a particular job or industry. As an employer, you must now negotiate with unions and employee associations to establish fair and consistent employment terms.
The new bill could help create more stability in wages and working conditions in your industry. But it could also mean increased costs and reduced flexibility, especially for small businesses that struggle to absorb extra costs.
Learn more about the Fair Pay Agreements and bargaining processes here.
Parental leave payments increase
As of 1 July 2022, parental leave payments increased by 6.33%. The maximum weekly rate for eligible employees rose from $612.76 to $661.12 gross per week. The adjustment was made to keep up with increases in average weekly earnings.
Even though these payments are made by IRD, your compliance with this legislation means eligible employees are paid the right amount while on parental leave.
Actionable steps for compliance success:
Conduct regular payroll audits
Help identify compliance issues and ensure you meet your employer obligations.
Keep accurate records
Be confident you can provide evidence of your compliance in case of an audit.
Seek professional advice
Speak to a payroll or HR specialist to determine if you comply with all the relevant legislation and regulations.
Staying ahead of the curve
By staying up to date with changes and following the steps for compliance, you can avoid penalties and legal issues while ensuring your employees are paid accurately and on time. Of course, it’s not just about the legal side – getting payroll wrong is the quickest path to a workplace filled with unhappy, disengaged employees, and no business owner wants that.
One way to stay on top of record-keeping and payroll compliance? MYOB's cloud payroll software. With streamlined processes and access to up-to-date and accurate information, you can effectively manage growth while remaining compliant with ever-changing payroll regulations.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.