There has been a lot of issues with employees finding they have not been paid correctly in the media and from investigations carried out by MBIE recently and for payroll we need to be proactive in showing we are focused on paying our employees correctly. In this post please find a copy of the letter sent to the Minister for Workplace Relations and Safety (Hon Iain Lees-Galloway) on what payroll can do now to help ensure employees know they have been paid correctly in each pay period. As stated in the letter it is not about creating more work for payroll it is about giving more certainty to employees each payday. Payroll needs to be more transparent and open for an employee to clearly see what they were paid when they were paid. This is also about payroll being a leader and building payroll as a recognised profession in New Zealand.
WHY PROVIDING PAYSLIPS SHOULD BE A LEGAL REQUIREMENT
Established in 2007, the New Zealand Payroll Practitioners Association (NZPPA) represents over 1300 members in the payroll industry. Its purpose is to develop payroll as a profession and we provide payroll technical training throughout the country and anywhere in the world where New Zealand payroll is processed. We have also established a leading certification framework to assess current levels of competence for payroll professionals along with annual recertification to ensure they are up to date in their knowledge.
At the NZPPA, over the last couple of years we have seen many cases where an employee has not been paid correctly. I would like to put forward an easy option to help resolve this issue which gives employees more transparency over what they have been paid, when they are paid.
In New Zealand there is no legislative requirement to provide a payslip to an employee; however, many employers do this anyway, and in some cases, it is an agreed term included in the employee’s employment agreement (usually it is found in older collective employment agreements). If there was a legislative requirement to provide a payslip to an employee each pay, then this would allow an employee to clearly see what has been paid both in relation to the work they have undertaken and what payments have been agreed in their employment agreement.
Overseas, it is common to see a legal requirement to provide a payslip to an employee when they are paid. I note that from April 2019 in the UK, there will be an additional requirement to include on the employee’s payslip hours worked for the purpose of “increasing transparency over whether employees are paid correctly” (UK Employment Rights Act 1996 (Itemised Pay Statement) Order 2018).
If it is a legal requirement for an employee to be given this information each pay, then they can question their employer at that time. If they cannot get payment questions answered from the payslip or no payslip is provided, they can then escalate the issue to the appropriate body. On the investigative or enforcement side, this would assist the employee in getting information from an employer in a form that is clear, concise and easy to understand. A payslip would be an additional report that would sit with a wage and time, or holiday and leave record which are already provided for in the legislation. However, a payslip is a much more practical and employee-friendly record.
If a payslip is to be provided by legislation, it is important to clearly state what information has to be on the payslip as a minimum so that this can be standardised. It is very important that any information on a payslip is in plain English so that an employee can easily understand. The employee can then be educated on what they are looking at on their payslip so they can question their employer if they do have concerns about what the information shows.
One of the issues that would be raised if this were to be implemented would be the additional compliance costs to the employer in providing a payslip to an employee. I do not see this as an issue as all existing and modern payroll systems already have some form of payslip option. A payslip is just a reporting option from a payroll system and would not be a major development cost. To reduce ongoing compliance costs, it would be important to ensure a payslip could be provided in a number of ways using technology instead of having to print out paper payslips. I would suggest that if included in legislation there is a clear requirement that if a computerised payroll system is used, then that system must be able to provide a payslip so employers are not forced to find other options when the payroll provider does not include it in their software. I started in payroll counting money and handing out paper payslips many years ago and payroll does not want to go back to that (please!).
I have provided this as a very high-level overview of how, if included in legislation, a payslip could help employees see and understand what they have actually been paid at the time of payment, so they can question their employer to resolve any issues before they become anything major. I see this as a proactive, positive and timely step in the present environment, where payroll could help resolve a lot of the issues that are regularly being reported in the media of employees not being paid correctly.
I am happy to discuss this important issue further and I would be grateful if you gave it some consideration.
I look forward to hearing your thoughts.
Chief Executive Officer