Another year, another set of challenges for payroll!

After the year of delivery (I did not see anything for payroll!), we now face a year of uncertainty. The things that the government has stated will be released may or may not be implemented depending on who is in power after the election.

Now, please understand I have no interest in the political, social or economic reasons changes will be made by government. My only concern is how it will impact on payroll (for example, increased workload, uncertainty, cost and time). So, if you want to make comments on your views on the reasons for change made by government, then this is not what this post is about. This article is all about the potential impact on payroll.

I want to put a few things on your payroll radar (these may or may not relate to your payroll environment).  NZPPA will try to get timely information out to payroll practitioners on how the changes could or will impact on the work you do. I won’t be referencing bills, working papers etc. in this post, just explaining in (hopefully) plain language how these changes could impact on payroll.

What to look out for on your payroll radar:

  • Equal pay
  • Fair pay agreements
  • Holidays Act review
  • Minimum wage increase
  • Contractors being treated like employees
  • The election (the wish list to get elected)
    • KiwiSaver 
    • Another tax threshold.

Equal pay

The update to equal pay legislation sees several ways a female employee could raise a complaint with their employer or employers as an individual or group of females in a workplace, or as females across an industry.  For payroll this should be easy to apply as it could result in pay rate changes and potential back payments.  

One area I see as a potential issue for payroll is when a complaint is made the information on what has or was paid would come from a payroll system. I cannot see anything in the legislation, working papers etc. that states how this will be provided and in what format.  This could mean a substantial amount of additional work falls on payroll. All the large organisations with lots of resources may be covered, but think about all the companies with no additional resources (for example, sole charge payroll practitioners). To help in providing information for an equal pay claim, we need the legislation to clearly detail what information is required and in what format.  It then needs to be made clear that a payroll system must have this available as a default report. This will ensure the information can be accessed when needed and it does not create more work for payroll. That way we all win: the employee, employer and PAYROLL!

Fair pay agreements

I will explain how fair pay agreements could impact on payroll (this would take several years to happen in the example below):

  • Presently, in your business you could have one agreement that includes a wage scale for all employees in your workplace and payroll applies that agreed wage scale in how they pay employees.  Over time a number of fair pay agreements could be created for a range of different industry occupations in your workplace (based on employees that do a certain type of work, skilled or upskilled). You could now have these employees under externally set and agreed fair pay agreements. (You can always pay better, however, this is about minimum industry terms.) 

Yes, this would be like a current CEA. However, the difference is the agreement could be totally different with no common thread. This involves a lot of extra work keeping up to date with these external agreements and how to apply them in a payroll system.  I see this as one of the common issues we presently face coming from unworkable collective agreements with complex terms and conditions.

Holidays Act review (will our nightmare finally come to an end?)

I expect at some time this year the Minister will finally release the report that was provided to him in October 2019.  This is not the solution to the Act, far from it. If all or part of the report is accepted, a bill could be created, followed by a select committee process and then another act of parliament. (There are three steps involved in the process.) But, it’s an election year and whatever is sent to the house or even if it’s passed, it may not survive whoever forms the government.  Also, implementing any change won’t happen this year as the changes seen from the review group were major and payroll providers would need time to change their systems (the earliest enactment realistically would be 1 April 2021).

For 2020 it will be more of the same in regard to the Holidays Act, but we should finally see where this coalition government wants to go.  And we should be able to see if we have a chance of a workable Act or just more of the same present nightmare.  

I am sorry not to be more positive, but from what I have seen and because payroll was NOT involved in the review in any meaningful level I expect we won’t get what we had hoped to resolve the issues with the Holidays Act and its application in payroll.

Minimum wage increase

This is one area we can confirm as we have a road map set by the government on where the minimum wage will go by 2021.  So, on the 1st April the minimum wage will increase from $17.70 to $18.90. And the starting out wage will change from $14.16 to $15.12. 

The final increase up to $20 will be dependent on who wins the election this year.  

Contractors being treated like employees

The government is looking at contractors being covered by the terms of a collective agreement when working in a workplace. What this could mean is the person is an employee of another company and the company is then hired to provide labour. Their employee could be working in your workplace, for example, as a temporary receptionist. They are not your employee, but in the future could be under your terms and conditions. Or this person is a contractor and not an employee of another company. 

Now, for the payroll in the workplace, if the contractor is working for an external party (e.g. a labour hire company providing a temporary employee), then this will not be your concern. However, if you are the company supplying the temporary labour, then you will be affected. And as the employee moves from one assignment to another, they could be under different terms and conditions.  This could be basic terms and conditions through to advanced. It could require a lot of manual work arounds as the configuration may be hard to implement in some payroll systems. It may not justify the expense in doing so which means it falls on payroll to cover.

The election (the wish list to get elected)

This is the year where all political parties put out their candy dish of false promises.  We will get to see what direction they want to take us in and then have all our hopes dashed when deals are done so the promises made don’t happen. A few of the things to watch out for include:

    • KiwiSaver 
    • Another tax threshold
    • Employment law changes (including our beloved Holidays Act).

So, watch this space and we will see what promises are made, broken, changed and finally decided on that could impact on the work we do in payroll (all depending on the government of the day of course).  If changes are made, 2021 may be a busy year for payroll!

NZPPA supporting NZ payroll since 2007!

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