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. Please note, changes will be shared in reverse chronological order, so you’ll always find latest news at the top.
Minimum Sick Leave Changes
When: From 24 July 2021
What: The number of sick leave days employees are entitled to will increase from five to 10. Employees will get the extra five days when they reach their next entitlement date – either after being employed in a job for six months or on their sick leave entitlement anniversary (12 months after they were last entitled to sick leave).
Please note, employees who already get 10 or more sick days a year will not be affected by this change.
Why: To ensure that employees have enough time to recover from sickness or injury, making the workplace healthier and more productive.
What you need to do: After an employee has been working for you for six months, or when an employee reaches their next entitlement date after 24 July 2021, they will be entitled to an extra five days paid sick leave a year.
This means everything else remains consistent but there are slight variations to what you need to do.
– Allow for employees to accumulate up to 20 days of sick leave. This means employees can carry over 10 days of unused sick leave into the next year.
– Ensure that payroll systems have been updated to reflect the increase in sick leave.
– Update employment agreements to align with employee’s new sick leave entitlements where necessary. The new minimum entitlements will apply whether or not an employment agreement is updated, but updating the agreement is best practice.
– Be aware of the changes and communicate with employees.
– Allow employees to use sick leave to care for a sick or injured spouse, partner, dependent child or any other dependent individual.
– Pay a sick employee what they’d get if they’d worked a normal day, including bonuses, overtime, etc.
– Let employees who’ve worked for you for less than six months take sick leave in advance.
– Choose to let employees carry over extra sick leave, beyond the 20 day requirement from year to year.
– Offer more than 10 days sick leave a year.
This also applies to casual workers if, after six months, they have worked
– an average of at least 10 hours a week and
– at least one hour a week or 40 hours a month.
Upcoming Rate Changes
As of the 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.
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 Chief Client Office, Gerald.