Payroll & Finance
April 2019 Payroll & Employment Law Changes – A Roundup
February 3, 2019
As is usually the way at this time of year, there are some upcoming payroll changes that all employers need to be aware of. Most of the changes will be taken care of for you in PayHero – check out the details below.
By 1 April 2019, all employers will need to have switched to payday filing. This means that employers need to file employee earnings and PAYE information with the IRD within two working days each time you pay your employees, rather than submitting an employer monthly schedule.
This change has been introduced to help the IRD increase their certainty about employees’ tax obligations and entitlements.
You can file online either directly from your payroll software, file upload in myIR, or on-screen in myIR. Both FlexiTime and PayHero provide zero-touch payday filing, and FlexiTime has done so since April 2018.
Minimum Wage Rates
The Government has announced an increase of $1.20 to the current minimum wage – raising it to $17.70 per hour, as of Monday, 1 April 2019.
The starting out and training minimum wage rates will also increase from $13.20 to $14.16 per hour, on this same date. This means that the youth minimum wage will remain at 80% of the adult minimum wage.
PayHero users will need to adjust the pay rates of any employees that are affected by these changes. If you have a large number of employees currently on the minimum wage, you can use the report centre to easily identify who these employees are. Fortunately, April 1 this year is a Monday which will often correspond with the start of a pay week. If not, there is more information on how to change a pay rate in the middle of a pay period in this support article.
The current KiwiSaver rates allow savers to contribute either 3%, 4% or 8% of their pay, before tax. An adjusted version of the legislation is currently going through parliament, but here is what we understand about the upcoming changes. It is proposed that on 1 April 2019 we will see an expansion on these rates, with the addition of 6% and 10% rates made available. This change would give contributors more flexibility over the amount that they save.
The new rates will be available for selection in PayHero prior to April 1.
There are other proposed changes such as renaming Contributions Holidays as ‘Savings Suspensions’ and reducing the maximum time frame from five years to one year; allowing over 65s to join the scheme; and the removal of the lock-in period of five years between joining the scheme and being able to withdraw money.
MinterEllisonRuddWatts have summarised these KiwiSaver changes in more detail.
Domestic Violence Leave
1 April 2019 also sees the introduction of a new Domestic Violence Leave entitlement, making New Zealand one of the first countries in the world to offer this type of leave to employees. Employees will have the right to take 10 days of leave per year to deal with the effects of Domestic Violence. People who are affected can include anyone who has directly experienced domestic violence, or who takes care of a child under the age of 17 who has experienced some form of Domestic Violence. This form of leave will be paid using the calculations in the Holidays Act, for BAPS leave (Bereavement Leave, Alternative Holiday, Public Holidays and Sick Leave). BAPS leave is paid at the rate of the relevant daily pay. Employees may be paid the average daily pay (ADP) if it’s not possible or practicable to calculate relevant daily pay or the employee’s daily pay varies in the pay period in which the holiday or leave falls.
PayHero will be adding a ‘Domestic Violence Leave’ pay code prior to 1 April 2019.
Employment New Zealand has further detail on the Domestic Violence – Victims Protection Bill on their website.
Student Loan and ACC Thresholds
On 1 April 2019 the annual student loan repayment threshold increases from $19,448 to $19,760. This means that the weekly pay-period repayment threshold for people repaying their student loans will increase from $374 to $380, giving them a whopping 72 cents per week more in their take-home pay.
The maximum annual ACC threshold will also increase from $126,286 to $128,470.
PayHero will automatically take care of these changes for you. However, if you have direct debits set up for salaried employees you’ll need to change the amount to account for the small change in their take-home pay!
The Taxation Bill will also ensure that automatic tax refunds will be provided by the IRD, rather than people having to apply for one. Similarly, those with a shortfall in tax will be automatically notified.
This is particularly beneficial to employees who have only worked part of the year. The tax calculations mandated by IRD assume that the employee will be working a fairly standard pattern for a full year. An employee who works only half a year can expect to receive a refund since they may not have reached the top marginal rate on which they were taxed when working.
Other Upcoming Employment Law Changes
While not directly payroll-related, there are other employment law changes coming up that you need to be aware of so you can ensure your employment agreements, policies and practices are up to date with the legislation.
90-day Trial Period Limitations
Currently, new employees can be employed on a trial period of up to 90 days, and before the employee starts work this has to be agreed and written in the employment agreement. From 6 May 2019 onwards, 90-day trial periods will only be available for businesses with fewer than 20 employees. Any existing 90-day trial periods will continue to be valid until this time period ends.
Businesses of 20 or more employees can still utilise probationary periods from 6 May. Probationary periods are used to find out if an employee is suitable for a job or for employees who are changing jobs with the same employer. Essentially, it’s a process that manages performance issues and ending employment if there are unresolvable issues. Probationary periods don’t give employers the same protection as a 90-day trial period and must be within the employment agreement.
You can find more information on probationary periods on the Employment New Zealand site.
Holidays Act Amendment – Rest & Meal Breaks, Union Rights and Vulnerable Employees
There are a number of other changes included in the Employment Relations Amendment Act 2018 that take effect from 6 May 2019.
Employers must now offer set meal breaks, which include specific terms of length, timing and payment, depending on how long the employee is working. Check out our blog post about it here.
PayHero employee time clock app provides a function where paid rest breaks are calculated automatically when employees take a break in the app. PayHero calculates whether the break should be a paid 15-minute or unpaid 30-minute lunch break.
There are also a number of changes relating to employers with unionised employees and collective agreements. Protections for vulnerable employees are being restored, especially in relation to restructuring provisions.
For more detail, check out Humankind’s great summary of the 2019 Employment Law change.
MyHR also filmed a Facebook Live Q&A on the Employment Relations Amendment Bill which is super informative.