Manage your payroll

You can choose whether to pay your staff weekly, fortnightly, or monthly. The most common way to pay is straight into the employee’s nominated bank account. This can be done through:

• Manual payments directly through your bank (e.g. internet banking)
• A third-party payroll solution (e.g. Smartly) to calculate and make the payments automatically
• Accounting software such as MYOB or Xero.

Whatever you choose, you’ll need to make the pay frequency and the day and date of payment clear to your employees upfront. This is usually part of their employment contract with you.

If you want to make changes to the way you pay an employee, or the frequency of payments, you’ll need to get their written consent first.

You need to ensure that you’re paying your employees at least the minimum wage. There are three different minimum wage rates: adult, starting-out, and training. You can view the current minimum wage rates on the Employment New Zealand website.

If you have seasonal peaks that require staff to work longer hours (such as farming and agricultural businesses), you’ll need to ensure their equivalent hourly rate doesn’t drop below minimum wage.

There are a number of payments you’ll need to pay to the IRD on behalf of your employees – for example, such as PAYE and ACC levies. Your obligations will be different for each employee, depending on their circumstances. Some online payroll solutions such as Smartly can make it simpler by calculating things like PAYE and paying it to the IRD automatically with each pay run.

Every employee is entitled to at least four weeks’ annual holiday after the first year of employment. They’re also entitled to sick leave, bereavement leave, and parental leave, as well as public holiday entitlements.

Leave is usually paid out when the normal pay is processed. You’ll need to ensure that when an employee is on leave, you pay them correctly and that they continue to accrue their leave entitlements during this time. To learn more about leave and holidays visit the Employment New Zealand website.

When a staff member leaves, you’ll need to calculate their final pay. This final pay will include their salary or wage payments (up until the date they leave), plus any leave owing to them.

All records of PAYE deductions must be kept for at least seven years. To learn more about how to set up good record-keeping and other systems, see our guide.

Remember that if you’re going on holiday (or if whoever manages your payroll is going on holiday) over the time that a pay run would normally occur, you’ll need to ensure you have a contingency plan in place to make payments. Some payroll solutions have leave settings that can manage these for you while you’re away.

Ensure that you allow enough time to make payments (e.g. before cut-off time) and check there’s sufficient funds in your account.

To make sure you meet your obligations as an employer, one option is to use a cloud-based online payroll system. A good payroll system helps you get things right by:

• Connecting with your accounting system and keeping your records up to date in real time (your accountant will love you for it)
• Alerting you to any adjustments needed when legislation changes, so complying is easy
• Providing easy-to-access information for your employees. They’ll get emailed payslips with all the details, and they can request leave through the system and keep an eye on their leave balance
• Helping you spot trends and insights, for example, get up-to-the-minute reports on leave requests, enabling you to plan cover while people are away or to spot popular times for holidays.

Ensure you select a reputable provider that integrates with your accounting system, and where your data will be secure. Ask about the provider’s secure servers: are they in New Zealand or elsewhere? Do they have full data back-up? Do they have a disaster recovery plan?

Make sure that the system you choose is scalable and meets all your business’ needs now and in the future.