Hi accounting fans and welcome back to the third and final part of our first time employer’s blog! In this last part, we’re going to talk about other necessary deductions you need to make for your employees and why it’s important to keep records and being a good employer.
Make the right deductions!
Sam here,
So in our last blog post we talked about PAYE and as employers, you need to deduct PAYE from your employee’s salary. Well, guess what? There are OTHER deductions you need to stay on top of as well! Woohoo!
Being a good employer in NZ
- Employee Kiwisaver contributions
- ACC levies
- Student loan deductions
- Child support payments
- Any other court-mandated deductions for infringements/fines to the employee
From a NZ perspective, there are other things that the employer is responsible for deducting here is a quick cheat-sheet of some of the more common items that will come up for deductions:
As far as kiwisaver contributions and ACC levies go – these are pretty straightforward. Student loan deductions are quite easy to do as well ($0.12. For the others though, you will need to get the necessary information from your employees to make sure that you are making the correct deductions from their pay. Worry not, because most of these things can be automated in your preferred payroll system.
Just another good reason to use a payroll system and not try to do everything manually.
Being a good employer in Malaysia
For my folks back in Malaysia, I’ve not forgotten about you! As an employer, you pretty much have to ensure that you deduct your employee wages for:
- KWSP/EPF
- SOCSO
There might be some special cases involving over payments that may require deductions be setup – but those are not too common in day to day employment.
Just remember that wherever you are, as an employer, it is likely that you have to deduct more than just PAYE from your employee’s salary. As always, talk to a HR expert or Employment tax specialist to make sure you are on top of things!
Oh yeah, and use a payroll software – like seriously, do it.
With that out of the way, let’s talk about…
Record Keeping and Privacy Act Requests
I mean, this is common sense really, regardless of which country you operate in, you need to maintain a record of your employees. So we thought that we’d chuck this in here anyway. To remind y’all.
Ashleigh here,
In accordance with the NZ Employment Relations Act 2000, every employer must keep comprehensive wage and time records of its employees. The Holidays Act 2003 provides a similar expectation with regards to annual leave records. You can read more about the information you must record here: Employment Relations Act 2000 and Holidays Act 2003.
However, it is important to know that what the Employment Relations Act 2000 and Holidays Act 2003 won’t capture, the Privacy Act 1993 will. Technically, an employee is entitled to all personal information the employer holds. If an employee makes a request under the Privacy Act 1993, you will only have 21 days to provide this information. Failure to do so may result in a complaint to the Privacy Commissioner.
Therefore, it is important that you keep thorough records of your employees; including their employment agreement, any changes to the employment agreement, medical certificates, warnings, or any other personal information you believe should be contained on file. This also applies to all payslips, deductions and annual leave balances held by the employees, even after they have left your firm. Generally speaking, you need to hang onto these records for about 7 years or so (either in digital or physical form).
Please note: If you have anything contentious to say about an employee, do not do it in writing. Many employers do not know this, but if an employee makes a Privacy Act request, they are entitled to every email that mentions them; irrespective of whether the employee’s name is specifically mentioned. If the email references a person, that person may be entitled to that information.
I have received emails as part of a Privacy Act request that specifically talk about dismissing my client. In these emails, a manager may talk about how they want to terminate an employee’s employment. I can see that the employer has then undertaken a witch-hunt against my client, creating bolstered allegations in an attempt to justify their decision. The issue with these conversations is that it shows predetermination, and any process undertaken after this will be flawed.
This may not be a problem you ever encounter, but it is a good habit to start.
Final words on being a good employer
Our final piece of advice is to be a good employer; one who acts fairly, reasonably and in good faith.
Ashleigh here,
In providing advice to my employer clients, I often say; “It’s not what you do, it’s how you do it.”
An employee will seek advice if they feel aggrieved. The catalyst to a personal grievance may not be an unlawful process, but rather because they did not get a farewell morning tea like past employees had. It is only once they seek advice that the entire process unravels.
Once you have a personal grievance, it does not matter why the employee sought advice. The only question is: did you act fairly and reasonably in all the circumstances? This means, did you have a substantive basis to take the action you did? Did you conduct a fair and reasonable process in accordance with Section 103A of the Employment Relations Act 2000?
I do not believe that an employer should need to seek legal advice prior to making any decision; that is not the purpose of the Employment Relations Act 2000. However, an employer should understand the principles of the Act and should always seek to be a good employer.
Sam here,
When all is said and done, you need to remember your employees ARE your business. If you have made the commitment to hire them, you need to make sure that they are well taken care of. Happy employees = successful business. Of course you will come across some bad eggs, but most employees are decent people like you and me.
Make sure that you are on top of your employees’ tax and other deductions and make sure that you are employing them legally and treating them fairly in accordance with the law. Remember, if you don’t know what should be doing with respect to your employees, remember that being nice is always a good place to start. Keep an open communication channel with your team and you will find that working with them will be a lot easier.
If you need a hand, please contact us.
Ashleigh Fechney – www.ashleightheadvocate.co.nz
Sam Harith – www.shadvisory.co.nz
Stay positive team!