How to conduct a payroll audit for a New Zealand employee

11 court cases in four months have been determined to be of interest to Employment New Zealand and those in finance, payroll, and HR positions.

AgriSmart guarantees compliance and makes sure that no matter what happens your business pays people correctly.

Our team has built a six-step audit that any business can follow to make sure they are compliant with New Zealand Employment law. This has been done to help our clients minimise their risk and is built into every client’s payroll software solution.

July 2020 to November 2020 Employment NZ Cases of Interest

  1. Cowan v Kidd [2020] NZEmpC 110
  2. De Wys v Solly’s Freight (1987) Ltd [2020] NZERA 285
  3. ANZ Sky Tours Ltd t/a ANZ Sky Tours v Wei [2020] NZEmpC 129
  4. Smith v Fletcher Concrete & Infrastructure Ltd [2020] NZEmpC 125
  5. Begley v Tech Mahindra Ltd [2020] NZERA 309
  6. Diamond Laser Medispa Taupo Ltd v Human Rights Review Tribunal [2020] NZCA 437
  7. Bay of Plenty District Health Board v CultureSafe New Zealand Ltd [2020] NZEmpC 149
  8. Ceres New Zealand LLC v DJK [2020] NZEmpC 153
  9. Marshall v W Gartshore Ltd [2020] NZERA 376
  10. Morgan v Transit Coachlines Wairarapa Ltd [2020] NZEmpC 169
  11. CultureSafe NZ Ltd v Turuki Healthcare Services Charitable Trust [2020] NZEmpC 166

Within AgriSmart’s integrated payroll and timesheets system

1.1 Individual employment agreement

  • Agreement has accurate parties including the legal entity that is truly the employer
  • Agreement has clear description of the work to be performed by the employee 
  • Agreement has an indication of where the employee is to work                                                 
  • Agreement indicates arrangements for work times and start date
  • Employees have seen, understood and were provided with time to get independent advice before signing
  • Agreement has wages or salary payable to the employee                                                             

1.2 Wage & Time Records

  • Records contain the employee’s correct name, postal address (and age where less than 20 years)
  • Records include the kind of work the employee usually does
  • Start & finish times and days worked are recorded to enable an accurate calculation of the employee’s pay
  • Pay is accurately recorded with calculation method for each employee’s pay period
  • Employer has paid no less than minimum wage rates for every hour worked.
  • The employee (or representative) can access their records by request.   

1.3 Records of deductions

  • Any deductions made without written consent are statutory – eg PAYE, child support, ACC levies, student loan
  • Employees receive their wages (including holiday pay) free from deductions unless there is specific written consent
  • Written consent for deductions are not disguised penalty clauses or directing employees on how to spend their wages
  • There is no written record showing deductions or payment by the employee to the employer in exchange for the job offer or the job.                                                

1.4 Records of deductions

  • Start & finish dates. Also holiday pay paid at termination
  • Days worked (if relevant for leave calculations)
  • Current entitlement to annual & sick leave. Also last anniversary date
  • Dates of annual, sick & bereavement leave taken
  • Payments for annual, sick & bereavement leave taken
  • Dates, amounts paid & hours worked for public holidays worked
  • Payment for all public holidays or alternate days not worked
  • Dates when became entitled to alternate holidays
  • Alternate days paid out – on request after 1 year since entitled                                                   

1.5 Inclusive annual leave (If ‘no’ – mark as NA.)

  • The inclusive rate is recorded as agreed in the written employment agreement
  • Work is so intermittent and irregular it is impracticable to provide 4 weeks annual leave.
  • The inclusion is shown as a separate and identifiable component of the pay rate. What does the payslip or other documentation say?
  • The inclusion is no less than 8% of the employee’s total gross earnings                                   

1.6 Consistency with visa requirements

  • The employee is working in the job position stated in the employment agreement and visa conditions
  • The place of work is the same as that on the visa conditions and in the employment agreement
  • Migrant workers have not had a ‘change of status’ to self-employed contractors – whether this is genuine self- employment or not.
  • The employee is receiving the rate of pay that forms part of the employment agreement and visa conditions.
  • The employee is working at least the minimum amount of hours stated in the employment agreement and visa conditions.