Payroll Tips

With Christmas fast approaching and summer in NZ its that time when most of us start thinking about our summer break.  But if you are an employer it also means Christmas pays and all the complexity that goes with it.

Here are answers to some of our commonly asked questions but as always payroll is complex and is sometimes not just a simple answer so if you need further information please contact us on 04 232 9199 or info@3rdArmAdmin.co.nz.

Payment date

Christmas Day and New Years Day this year falls on a Tuesday which means that for the week of Christmas and New Year those normally paid on a Tuesday or Wednesday will need to be paid on the Monday.

Additionally if you are closing down for the Christmas / New Year period you will need to pre run these payrolls.   This all takes time so ensure you get this information to your payroll people in plenty of time.

What’s the difference between holiday pay and annual leave?

Every year we get asked this same question so we hope this helps.

When a full-time or part-time employee begins a new job, they accumulate holiday pay from their start date for the first 12 months (or until a standard anniversary date).   Holiday pay is 8% of their gross earnings and calculated in dollars.

When the employee reaches their anniversary date, their holiday pay rolls over and becomes annual leave.  This is then calculated in hours or days and they can begin to take annual leave. They will then start accumulating holiday pay for the next year.

Why does the annual leave rate sometimes differ to the normal pay rate?

Annual leave is paid at the higher of the ordinary weekly pay or the employees average weekly earnings over the previous 12 months.

Ordinary weekly pay includes everything an employee is normally paid weekly, including:

• regular allowances, such as a shift allowance
• regular productivity or incentive-based payments (including commission or piece rates)
• the cash value of board or lodgings
• regular overtime

Annual leave cash ups

At this time of year it is common to get requests from your employees to cash up part of their annual leave.  Following are the things to consider:

• Annual leave is not able to be cashed-up unless the employee asks in writing and has completed 12 months employment. Employees may request to cash-up less than a week at a time but can only cash-up a maximum of one week of the employee’s minimum annual holidays is any entitlement year.
• An employer must consider a cash up request within a reasonable time frame. They may say no and don’t need to give a reason if that is the case but either way must inform the employee in writing.
• If the answer is yes then this must be paid in a timely manner (usually by the next pay period).

Public Holidays

There are many different scenarios depending on whether your employee would normally work or not but basically if the employee doesn’t work on the public holiday and this is a day that would otherwise be a working day for them then they must be paid for the Stat Day.  If they wouldn’t normally work on that day they don’t receive any pay for that day.

If the employee works on the public holiday then they must be paid at least time and a half for the time worked on the day, paid their on call allowance (if applicable) and given a full day’s alternative holiday (if they would normally work that day – if not no alternative day).

Some of these are complex and there are many different scenarios so this is by no means an exhaustive list of answers.  If you have any doubts or require any further information, please call us on 04 2329199 or fill out your details below and we will be in touch.