Payroll glossary for kiwi businesses

Payment of annual leave in addition to an employee’s earnings – instead of the employee taking time off work. Employees can only cash out 1 week of annual holiday per year.

A casual employee has no guaranteed hours of work, no regular pattern of work, and no ongoing expectation of employment. This arrangement must be made clear in the employment agreement.

Deductions from an employee’s earnings, instructed by IRD, for the payment of child support. Employers will receive a Child Support Notice (CS503) from IRD, which they must act on until further notice is given by IRD.

A payment made based on a percentage of actual sales or achieving a target.  Commission can be paid on top of a salary or a wage, or the employee could be working on commission only.

Someone contracted for a service by an employer. They do not receive an employment agreement. Their rights are determined by general civil law and they are not entitled to the minimum employment rights.

A unique code assigned to registered NZ charities, beginning with the letters ‘CC’.

An agreement between the employer and the employee, stating the nature of an employee’s employment. The agreement includes, but is not limited to: start date, hourly rate or salary, and employment type.

Someone who enters into an agreement with an employer, where they agree to serve the employer and are remunerated for their labour. They must have a signed  employment agreement. An employee includes: full-time, part-time, permanent, fixed-term, casual and seasonal worker – amongst others.

A tax deducted from the employer Kiwisaver contribution – if this contribution is not included in the employee’s gross earnings. Check out the current ESCT rates.

Additional leave is available to parents also eligible for primary carer leave. It extends the amount of leave available to 52 weeks following the birth of a child or adoption/whangai/home for life – depending on how long the parents have worked in their current employment.

Paid leave for employees affected by family violence. Family violence, also known as domestic violence, includes physical, sexual or psychological abuse experience in family or intimate relationships.

If an employee leaves employment, they will be due their final pay. Employees should receive their final pay on the pay day for their final period of employment at the latest. It must include payment for all the hours worked since the last pay until the end of employment, payment for annual holidays, public and alternative holidays owing, and any other payments owing.

An employee employed for a set period of time, an event or project, and cannot be used instead of a probationary period. There must be a genuine reason based on reasonable grounds for the fixed term and the employee must be told about this reason.

Employment legislation doesn’t define what full-time work is, but full-time work is generally considered to be around 35 to 40 hours a week.

The underlying concept that governs how parties interact and manage the workplace relationship. Good faith is about both parties to the relationship not misleading or deceiving each other and communicating effectively.

All payments that the employer is required to pay to the employee under the employee’s employment agreement for the period during which the earnings are being assessed. The earnings are usually being assessed to calculate the payment of holiday and leave.

The total an employee earns in salary, wages or other payments – before deductions are made.

A 15% tax added to the price of most goods and services. Contractors may be registered for GST, which would impact your payroll.

The value of leave an employer owes to an employee at the end of employment.

Leave taken by the employee, without pay – as agreed with the employer.

Employment legislation doesn’t define what part-time work is, but part-time work is generally considered to be less than 35 hours a week.

Available to the spouse or partner of an employee having a baby. Employees are entitled to 1 or 2 weeks of partners leave, depending on how long they have worked for the employer.

Payments made by IRD to the primary caregiver of a child under 6 months through giving birth or otherwise taking permanent primary responsibility for the care of the child through adoption, whāngai or home for life.

The frequency with which employees are paid. Most commonly this is weekly, fortnightly or monthly.

The day your employee’s earnings will be deposited into their nominated bank account.

The period for which you are paying your employees.

A physical or electronic document that advises the employee how much they were paid. It will often show how much annual holiday and sick leave they have available. Employers are not legally required to provide pay slips.

An income tax deducted from an employee’s earnings, based on how much they earn in a pay period. Check out the current PAYE rates for individuals.

Sometimes referred to as a payroll intermediary, this is a third party who has the authority to engage with IRD on behalf of a business. This specifically relates to payroll matters. PAYE intermediaries are accredited by IRD.

A system that allows employees to donate directly from their pay and get an immediate 33.33% tax credit – back into that same pay.

An electronic tool which provides a framework for employers to enter their payroll data into. The payroll software will automatically make calculations based on this data and present the employer with payroll values.

Additional payments usually provided as a rate to the employee for special activities, such as: overtime, doing special tasks, or for working shifts on a particular day.

Employees who are employed by the employer indefinitely until either party terminates the agreement.

A type of payment is typically used in agriculture – specifically for fruit picking. The employee would be paid a rate on units of production they have worked on or produced.

Up to 26 weeks of leave available to employees having a baby, or their spouse if they have all or part of the birth mother’s parental leave payments transferred to them. It is also available for employees who will be the primary caregiver for a child under 6 years of age through adoption, home for life or whangai.

A payment to employees based on their overall performance. This could be tied to meeting particular KPIs.

Aotearoa New Zealand has 12 public holidays, including one regional anniversary day. Employees get a paid day off on public holidays if it’s an otherwise working day for them.

A fixed annual amount that is divided equally by the number of pay periods.  Often, this will include compensation for working additional hours built into the salary rate, so no additional payment would be made to the employees for additional hours worked.

Commonly employed in the agricultural sector, and are employed until the end of the season – as defined by the employment agreement.

Paid time off work if an employee, their spouse, partner, dependent child, or other person who depends on them is sick or injured. The minimum entitlement is 10 days once an employee has worked for the employer for 6 consecutive months – regardless if they are part-time or full-time employees.

The date an employee becomes entitled to sick leave or is allocated additional sick leave. Initially the anniversary date is 6 months after continuous employment and then 12 months after that.

Payments employers are required to deduct from employees with an obligation to repay a student loan once in employment and pay to IRD. Check out the current student loan repayment rate and thresholds.

A payment based on an hourly rate and is only for an employee that gets paid just for the hours that they work.