Eyes on employment law this year
Are you ready for employment legislation changes? If not, you can start your preparations here:
Minimum Wage Increase — $20.00 per hour from April 1, 2021
The minimum wage rises to $20.00 per hour next month, from $18.90. So for an employee who works 40 hours a week and was getting the minimum wage, they will earn an additional $44 per week before taxes.
The training and starting-out minimum wage rates will both increase to $16.00 per hour, remaining at 80 percent of the adult minimum wage. This is a rise from the current minimum rate of $15.12 per hour.
Public Holidays Increase to 12 with new Matariki Holiday in June 2022
Prime Minister Jacinda Ardern has announced the date of the inaugural Matariki public holiday.
This will be celebrated on Friday, June 24 2022 and will increase the current public holiday entitlement from 11 to 12 days per year. Payments for working or not working on a public holiday remain the same.
Holidays Act 2003 — Proposed Overhaul
The changes below were recommended by a panel of union, business and government voices tasked with resolving the country's long-running payroll mess:
• increase sick leave from five days to 10 days per employee.
• that employees will be able to take leave for sickness or bereavement from their first day on the job under a planned revamp of the complicated Holidays Act.
• parents will be paid at their full rate for holidays on returning from parental leave, removing a fish-hook which currently leaves them out of pocket.
Work has now begun on the further detailed policy design. Legislation to implement the changes is expected to be introduced in early 2022 and will go through the full parliamentary process. After the legislation is enacted, businesses and employers will be given plenty of time and guidance to prepare for the changes.
As an employer, are you ready?
The ultimate responsibility for paying staff correctly, and liability for any remedial payments arising out of non-compliance, lies with the employer. Because of this, organisations are encouraged to ensure they are meeting the full obligations under all employment legislation — and in the cases above this applies to the Minimum Wage Act and the Holidays Act.
Some key issues for businesses to understand are:
• What leave an employee becomes entitled to, when they become entitled and how these entitlements would be impacted when an employee changes their pattern of work.
• The level of payment an employee is entitled to when they take a period of annual leave (ie the higher of Average Weekly Earnings or Ordinary Weekly Pay).
• The level of payment an employee is entitled to for sick leave, bereavement leave, or a public holiday (distinction between Relevant Daily Pay or Average Daily Pay).
• Situations where an employee may be paid out their holiday pay entitlement as they go.
• Situations when an employee may cash-up a portion of their annual leave entitlement.
• What and how much an employee is entitled to when they leave their employment.
• How periods of unpaid leave can impact an employee's entitlement to, and payment of, leave.
• A payroll system is a tool to help employers meet their obligations, however there will always be cases were manual intervention and adjustments are needing to be made. Understand when this might be (ie entitlement to a public holiday after an employee's last day of work.)
While these issues can be complex, it is essential that employers understand the obligations they have to their employees. Many employers implicitly trust that their payroll system is doing everything correctly and adopt a “set and forget” mentality.
To help mitigate any issues, employers could undertake some of the following steps:
• Educate themselves and their employees on leave entitlements and pay.
• Ensure complete and accurate records are being kept that are compliant with each of the Acts and the Employment Relations Act 2000.
• Ensure employees are receiving their payslips, and encourage employees to open them to see how their payments have been calculated and paid.
• Provide all employees with an employment agreement and specifically detail how a week is defined for annual leave purposes, and that any variations to employee working arrangements are recorded in writing
• Ask questions of your payroll staff or providers to ensure compliance, and regularly check your payroll results and calculations.
Reach out to your trusted business adviser: At BDO Gisborne, we have HR consultants and payroll specialists on hand to guide you through this transition. We're here to help.
■ Gemma co-wrote this article with Linda Paulson — both are HR consultants and employment specialists working within BDO Gisborne's People & Performance team.