What's in store for NZ payroll in 2020?
Another year, another set of challenges for payroll! After the year of delivery (I did not see anything for payroll!), we now face a year of uncertainty.
I want to put a few things on your payroll radar (these may or may not relate to your payroll environment). I won’t be referencing bills, working papers etc. in this post; just explaining in (hopefully) plain language how these changes could impact payroll. What to look out for on your payroll radar:
- Equal pay
- Fair pay agreements
- Holidays Act review
- Minimum wage increase
- Contractors being treated like employees
- The 2020 payroll wish list
- Another tax threshold.
The update to equal pay legislation sees several ways women can raise a claim for unfair pay with their employer or employers as an individual or group in the workplace, or as women across an industry. For payroll, this should be easy to apply as it could result in pay rate changes and potential back payments.
One area I see as a potential issue for payroll is when a claim is made the information on what has or was paid would come from a payroll system. I cannot see anything in the legislation, working papers etc. that states how this will be provided and in what format. This could mean a substantial amount of additional work falls on payroll.
All the large organisations with lots of resources may be covered, but think about all the companies with no additional resources (for example, sole charge payroll practitioners). To help in providing information for an equal pay claim we need the legislation to detail what information is required and in what format clearly. It then needs to be made clear that a payroll system must have this available as a default report ensuring the information can be accessed when needed so as to not create additional work, that way we all win, the employee, employer and PAYROLL!
Fair pay agreements
I will explain how fair pay agreements could impact payroll (this would take several years to happen in the example below).
Presently, in your business, you could have one agreement that includes a wage scale for all employees in your workplace and payroll applies that agreed wage scale in how they pay employees. Over time several fair pay agreements could be created for a range of different industry occupations in your workplace (based on employees that do a certain type of work, skilled or unskilled). You could now have these employees under externally set and agreed to fair pay agreements.
Yes, this would be like a current CEA, however, the difference is the agreement could be different with no common thread. This involves a lot of extra work keeping up to date with these external agreements and how to apply them in a payroll system. I see this as one of the common issues we presently face coming from unworkable collective agreements with complex terms and conditions.
Holidays Act review (will our nightmare finally come to an end?)
I expect at some time this year the Minister will release the report that was provided to him in October 2019. This is not the solution to the Act; far from it. If all or part of the report is accepted, a bill could be created, followed by a select committee process and then another act of parliament. Implementing any change won’t happen this year as the changes seen from the review group were major, and payroll providers would need time to change their systems (the earliest enactment realistically would be 1 April 2021). For 2020 it will be more of the same in regard to the Holidays Act.
Minimum wage increase
On the 1 st April the minimum wage will increase from $17.70 to $18.90. And the starting-out wage will change from $14.16 to $15.12.
Contractors being treated like employees
The government is looking at contractors being covered by the terms of a collective agreement when working in a workplace. For example, a temporary receptionist may not be your employees, but in the future could fall under your terms and conditions.
Now, for the payroll in the workplace, if the contractor is working for an external party (e.g. a labour-hire company providing a temporary employee), then this will not be your concern, however, if you are the company supplying temporary labour then you will be affected, and as the employee moves from one assignment to another they could be under different terms and conditions.
This could be basic terms and conditions through to advanced, it could require a lot of manual workarounds as the configuration may be hard to implement in some payroll systems. It may not justify the expense in doing so, which means it falls on payroll to cover.
The 2020 payroll wish list
A few of the things to watch out for include:
- Another tax threshold
- Employment law changes (including our beloved Holidays Act)
Guest post written by David Jenkins from the New Zealand Payroll Practitioners Association.
NZPPA - Supporting NZ payroll since 2007.
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