Author: David Jenkins, NZPPA CEO

Back in 2023, I wrote an article about the issues with treating the same employee doing different positions for the same employer as separate employees in payroll. For this article, I will refer to these types of employees as multi-jobbers. In a nutshell, NZPPA’s view in 2023 was that one employee should have one employment agreement covering all work undertaken by the employee, even if they worked in totally different roles for their employer. This meant one taxable gross for leave (Holidays Act), KiwiSaver, etc. The aim was to keep it simple and workable in payroll.

Since that time, NZPPA has undertaken payroll audits and received questions through the NZPPA Payroll AdviceLine on this area, and we needed to confirm what can and cannot be done. We approached both MBIE (Labour Inspectorate) and IRD to understand their current view of the issue.

This article is based on their response and will be NZPPA’s new position on this area. I will also include our view on the issues involved from a payroll perspective.

So, what is the issue (from the original 2023 article)?

If an employee works different roles for the same employer (multi-jobber) and is paid for those roles at different rates, the main point is that they are still only working for the same employer. Why provide multiple employment agreements when one can be used with additional roles added in (by way of a variation to the employment agreement or the inclusion of a multiple roles/rates section)? That way, there is just one employment agreement between the employer and employee that covers the full working relationship.

There is no benefit to having multiple employment agreements, as they do not add any extra protection, only confusion and complexity to the employment relationship. The main push back from the business is that the manager running one part of the company that is paying the employee at a lower rate does not want to pay a higher rate for leave because the averages used in the Holidays Act will inflate the rate if the employee is also being paid a higher rate for another role worked.

Can one employee work separate roles for the same employer and be set up in payroll as separate employees?

The short answer is YES. Both IRD and MBIE confirm this, but some criteria must be met.

View of the Inspectorate:

The Holidays Act 2003 (the Act) does not address the ‘multi-jobber’ situation, so the Inspectorate would consider whether these types of working arrangements are compliant on a case-by-case basis.

However, in general terms, the Inspectorate is more likely to consider an arrangement as compliant when the employee has multiple jobs with the same employer and the roles are substantially different and are covered by different collective or individual employment agreements that provide different entitlements. Issues will arise when multiple roles or jobs are used in a way that precludes or limits an employee’s entitlements under the Act.

The Inspectorate is more likely to consider an arrangement to be non-compliant if the employee is being disadvantaged and not receiving entitlements due to the arrangement, or if the arrangement is not genuine and the jobs are ‘tangled’ in practice.

Points to consider:

1. Are there multiple employment agreements/collective agreements (one for each role)?
2. Is the employee receiving minimum entitlements under the Act?
3. How are record-keeping requirements being fulfilled?
4. How is the arrangement working in practice?
5. Where one of the roles is ‘casual’, does the employer have checks in place to ensure the employee satisfies the requirements of section 28 of the Act?

View of IRD:

• If each role has its own employment contract, this will mean that each role will be using different tax codes; therefore, the same employee can appear on the same return, and they will have separate lines for each tax code.
• Employers need to use a different tax code; the file will error if the employee’s details are the same.
• Separate employment contracts mean deductions are based on the gross for each role.

Does NZPPA support this?

Yes, if all the criteria stated above are fully met, BUT that is the issue that NZPPA has.

Having good intentions is excellent if it is followed through, but from the audits we have undertaken, we constantly see that good intentions have now fallen behind, and payroll is left with significant noncompliance because of the following (using the Inspectorate’s points to highlight some of the issues we have seen):

1. Are there multiple employment agreements/collective agreements (one for each role)? 

• There were, but over time, they have not been maintained, and the roles are now merged to some degree, making the situation a farce and disadvantaging the employee.

2. Is the employee receiving minimum entitlements under the Act? 

• If 1 (above) has not been managed correctly, then this directly impacts how payroll can determine the entitlement the employee should receive.
• Also, if an employee working variable hours in multiple separate roles does not have their entitlement clearly defined, this multiplies the noncompliance for payroll.

3. How are record-keeping requirements being fulfilled? 

• This is already a real issue in payroll (gaps in what has been recorded or not recorded at all), especially with the wage and time (s130) and holiday and leave record (s81).
• Now, payroll must maintain multiple records for each employee. If 1 and 2 (above) are not managed correctly, this creates noncompliance in record keeping.

4. How is the arrangement working in practice? 

• I am sorry to say, but the set-and-forget mentality prevalent in many payroll systems is another factor undermining the multiple job situation. Payroll must constantly check to ensure the payroll system and its calculations are set correctly for any change in work pattern for the multi-jobber employee.

5. Where one of the roles is ‘casual’, does the employer have checks in place to ensure the employee satisfies the requirements of section 28 of the Act? 

• Ensuring a casual is a casual is one of the issues that payroll faces frequently, as how they are used in the business is out of the hands and remit of payroll. Having a multi-jobber employee as a casual employee will need extra monitoring, as it could create noncompliance within the grouping of roles.

What other issues do you need to consider?

• Will the employee accept that they will need to use a different tax code for each separate role?
• How will having two roles impact any government or agency deductions?
• How will this impact tax record-keeping?
• What issues occur if an employee is taken through a disciplinary process for serious misconduct and terminated from one role? How would it impact any other roles they had if under separate employment agreements?
• Does the business have additional support from management or HR to keep employment agreements current and up to date for payroll to act on for multi-jobber employees?
• Can the payroll system actually do this?

In conclusion, yes, a multi-jobber employee can exist in payroll as long as the criteria detailed above have been met. So, if you can put your hand on your heart and state that your business has the resources (not just in payroll) to support multi-jobber employees by managing and updating work patterns, employment agreements, and determining entitlements (based on what is a week and day) for this person in each of the roles they work, and making all the decisions (promptly), multi-jobber employees could work in payroll.

If you know the business cannot support this approach, you need to put your case forward based on compliance to stop this from happening. Please understand this is a lot of work ongoing for the business and payroll, and it can easily go awry, so that best intentions won’t cut it. It must be backed with absolute resolve (business support) for it to work for us in payroll.

NZPPA supporting NZ Payroll since 2007!