Navigating NZ Payroll: The importance and necessity of record keeping

Navigating NZ Payroll #2 - Record Keeping.

Another month, another payday. In the rush of getting everything filed and out the door, it can be easy for files to get buried in servers (or worse, filing cabinets) - or even for information to simply become part of a template for the next month. Yet in New Zealand, taking care of that information and keeping effective records isn’t simply good practice – it’s a legal requirement.

In our first blog in the ‘Navigating NZ Payroll’ series, we looked at the basics of payday filing. Whether you’re running payroll for your own company or for a client, you should know exactly what records must be kept. Unsure? That’s exactly what this blog is here for. Here’s our guide to accurate payroll record keeping for accountants, bookkeepers and outsourced payroll bureaus.  

What are the regulations around payroll record keeping?

According to the Ministry of Business, Innovation and Employment (MBIE), employers must keep clear records for all their employees for seven years. This includes any departed employees if they have left the company in that seven year period, as well as any new employees. 

Keeping these records comes with significant responsibility. It’s essential that employee records including personal details and pay information are kept confidential, according to the Privacy Act 2020. Employers must only gather records that are required for their compliance, and employees are legally permitted to access their personal file when requested.

Why is record keeping mandatory?

For MBIE, it’s all about keeping employers compliant and ensuring that they’re adhering to the Holidays Act (2003) and Employment Relations Act (2000). Labour inspectors can ask for these records at any time as part of an inspection, as well as former employees and specific union officials.  

Although we know that the Holidays Act is set to change in early 2023 (check out our Hub for more information!), one thing is almost certain - the statutory seven year period for record keeping will still remain.

As much as it might seem like additional admin for employers, this record keeping benefits them as well. It allows employers to correctly calculate leave and pay, and ensures that they’re on top of each employee’s development and important information. Having this information handy can be useful as well in the event of a dispute or legal issue. 

What data should you be recording?

There are two types of records that employers (and you, if you’re running payroll on behalf of a clients’ business) should be collecting.

One is individual employee records, which you should collect for each person employed by your client, and the other is the overall company information.

Individual employee records

  • Name
  • Postal address
  • Age (if under 20 years old)
  • Emergency contact details
  • Their first day of employment
  • Their employment agreement
  • Visa status (if applicable)
  • A description of their role
  • The number of hours worked in each pay period
  • Their salary/wage for each pay period
  • Their current leave entitlements 
  • Any leave taken in their employment
  • Public holidays worked
  • Any manual leave payments
  • Final date of employment
  • Their tax code declaration (IR330)

Company records

  • All wage deductions made across the company, including PAYE, student loan payments and KiwiSaver
  • Any requests to transfer holidays or cash them up
  • Evidence of compliance with health and safety responsibilities
  • Evidence of rest breaks provided

Although not mandatory, it can be beneficial to ask employees on hourly wages to fill out timesheets. This can make it much easier for you and your clients to record the correct hours worked. 

What are the consequences of inaccurate or missed record keeping? 

There are potentially severe consequences if employers don't keep accurate records. The biggest penalty can arise if these records show that employees have been incorrectly paid, under the Employment Relations Act (2000) or the Holidays Act (2003). The Employment Relationship Authority (ERA) can fine an individual up to $50,000, or a company $100,000.

Companies who aren’t keeping records can also receive an infringement fine directly from labour inspectors. The minimum fine is $1000, with a maximum cap of $20,000 over three months. 

Paper records versus digital records

Records can be kept in either paper form or digital form. Employment New Zealand has a number of downloadable paper templates to support your record keeping, including wage records and leave records

That being said, keeping paper records for over seven years can be a logistical challenge; especially when you have a significant amount of information to file away. The level of information can also be tricky to search through when it’s all on paper, making potential inspections a real headache.

Digital records, if organised well, can be a significant improvement – both in terms of security and ease of use. However, in keeping with your responsibilities around data security and privacy, it’s crucial that digital records are safe from outside access. That’s where bringing in external software can ensure security and peace of mind. 

The benefits of cloud payroll software for record keeping

There’s a growing number of payroll softwares that are cloud-based. There are so many advantages to moving to a cloud-based platform; in fact, KeyPay recently conducted research amongst 339 accountants that found that 72% of Kiwis are currently using cloud payroll for their clients! You can read the full research report here

Let’s find out what some of these benefits are, in relation to record keeping.

It’s easily accessible from anywhere, anytime

Most cloud platforms offer an easy-to-access portal where information is stored, viewed and accessible whenever you need it.

KeyPay’s portal collects employee data and records can be accessed in just a few clicks. You can also search through past records if you need to check anything. The best part?

User permissions can also be enabled to restrict access to confidential information.

It’s paperless

Documents, leave requests, payslips, expense claims and other key pieces of employee information are stored securely within platforms like KeyPay.

This saves you so much time, minimises your impact on the environment, and frees up space in your (home) office from needing to retain documents in filing cabinets! What a win.

It’s secure

By using cloud software like KeyPay, you’re effectively outsourcing your data security requirements.

KeyPay is a certified cloud platform with secure SSL encryption, so your confidential information is in good hands. Check out our trust & security page for peace of mind over how client data is stored and kept safe.

KeyPay streamlines record keeping with ease

With our true cloud platform, KeyPay simplifies record keeping and ensures compliance for accountants, bookkeepers and payroll bureaus.

You’ll never worry about a payroll audit or employee request from your clients again - as everything is stored securely and can be retrieved whenever and wherever.

Find out how payroll software like KeyPay can support you with record keeping and get in touch with our team today.

Jen Scouler

NZ Content Specialist

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