The new financial year is here, bringing new and significant changes to New Zealand’s taxation & payroll.
As a business, it is essential to remain up to date on new emerging payroll trends. 2021 comes with a new suite of major changes in employment legislation, and we are here to uncover all the latest changes to help you stay on top of it.
Uncover your 2021 – 2022 guide to the latest payroll trends in New Zealand to help you lookout for this financial year.
Upcoming Rate Changes (as of 1st of April 2021)
The following changes to the minimum wage have been announced. The starting out and training minimum wage remain at 80% of the adult minimum wage.
ACC Earners Levy and Threshold – remain unchanged
Current Tax Rates for tax year 2021-2022 – highlighted new changes
New Secondary Tax Code
Student Loan Deduction
The student loan percentage will remain the same for the 2021/2022 tax year (12%). However, the annual repayment threshold will increase from $19,448 to $19,760.
New ESCT Rate – highlighted new changes
– There are changes to KiwiSaver Status Codes – will be fewer and improved.
– No longer need to update IR on KiwiSaver Savings Suspension start and finish.
Employment Relations Updates
Legal Requirements to pay a deceased employee final pay
Where an employee dies and an amount less than $11,000 is payable by an employer, it is lawful for the employer to make the payment of this sum.
Application of minimum Wage
The minimum wage must be applied in the way that employee receives the minimum wages for each hour worked.
Government Paid Parental Leave Updates
Government Paid Parental Leave will increase from 22 weeks to 26 weeks from 1st July 2020.
– Currently paid up to the max weekly rate of $585.80 – increase likely due to min wage increases.
– Employee can have up to 52 hours keeping in touch days (excluding first 28 days after birth).
– Can apply for up to 12 months parental leave.
– The employee is still entitled to 4 weeks annual leave on their anniversary.
– Upon return to work any annual leave taken will need to be checked based on when the leave came due you may need to override the value paid to represent average weekly earnings rate.
Family Violence Leave (FVL)
Reminder – Family Violence Leave requirement (formally DVL)
– Up to 10 days paid leave per year and is not accumulative.
– Employee’s must have completed 6 months continuous employment to qualify and due every 12 months from this 6-month anniversary date (same as sick and bereavement leave requirement).
– Request and response must be in writing for record keeping.
– Employer must respond within 10 days of request and if requiring proof must do so within 3 days.
– FVL is paid at the employee’s RDP (Regular daily pay) or ADP (Average daily pay).
– The employee can request a short-term variation to their working arrangements (up to two months or shorter). This can include changes to hours, location, and duties of work. The employer must respond within 10 working days to this request.
– Impact of work pattern variations may mean you will have to update payroll entitlements and payment methods for both annual and FBAPS leave.
– Importantly make sure you get everything in writing, and consult with the employee on the impact to any other leave.
– Review your agreements to include this new leave type in your policies and conditions.
– ACC can be topped up with Family Violence Leave.
– The Holidays Act is highly complex and affects all employees and employers across the country. We have begun further detailed policy design work to implement these changes. The Government expects to have introduced legislation by early 2022, which will go through the full parliamentary process. Businesses and employers will be given plenty of time and guidance to prepare for these changes.
– Bereavement leaves for miscarriage. Amendment bill (No.2) This bill seeks to make it clear that employees are eligible for bereavement leave following the unplanned end of a pregnancy by miscarriage or still-birth. The mother and their spouse or partner would be entitled to 3 days’ bereavement leave.
– Parent-Teacher interview leave. Amendment bill. This bill amends the Holiday Act 2003 to allow workers with children to take leave to attend parent-teacher interviews. Employees that are eligible will be able to take up to 4 hours’ parent-teacher interview leave in each 12-month period of current continuous employment.
– Increasing the minimum sick leave entitlement. The Government has introduced a Bill to increase employees’ minimum entitlement sick leave from five days to ten days per year. The Bill was introduced to Parliament on 1/12/2020, and is currently.
Payroll processes are complex and ever-changing. Especially since the pandemic, businesses have been faced with many unexpected changes, leaving a huge impact on their payroll processes. It is crucial to understand your payroll obligations to remain compliant and efficient to avoid any pitfalls.
Our experts simplify payroll and always stay on top of the latest trends. We not only manage payroll in New Zealand but also in Australia and the Pacific territories to ensure you remain compliant. If still unsure of the benefits of outsourcing your payroll, check out our FAQs on why you should, or email our Payroll Manager, Crystal.