The Christmas period and paying your staff

We’re heading into the silly season again. It’s referred to as that for a reason. In NZ with our annual close down of business we seem to go flat out to squash a months of work into 3 weeks in December. Unless you’re in retail and selling things people want for Christmas, these are never usually profitable months.

For those of us that are employers it’s a particularly expensive time of year. There’s 6 statutory days between Christmas and Waitangi day. That’s 6 days you pay staff not to turn up and do any work. Or, if you’ve got a business that’s open on those days you have to pay more and give them a day in lieu. Then when people return it always seems to take a few weeks for everyone to rev up into full productivity again.

A quick reminder on the statutory day pay obligations:  If someone would normally work on the day the holiday falls you have to pay them for it. If your business is open on the statutory day and your employee works on that day you have to pay them time and a half and give them a day in lieu. This year Boxing day, January 2nd and Waitangi day all fall on a Saturday. So these are all carried over to the Monday – Yes Waitangi Day is now Mondayised and is a statutory day on Feb 8th. If you want help working out any of your holiday pay obligations give Nicole a call, she’s our head bookkeeper and comes across all of these situations.

For some employers, you pay all the staff their annual leave as you close down at Christmas. Then there’s the GST and provisional tax payments due in January to fund as well – so a tough time of year for business cash flow.

Do any of these come as a cash shock to you and your business? If the answer is yes, perhaps your new year’s resolution should be to talk to us about helping prepare a budget and cash flow forecast for next year so you can enjoy that well-earned break.

The other side of this is we all get a chance to spend time with family and put our feet up, rest and recover for the new year. I always come back invigorated and keen to get into a new year.

What are your employment obligations?

There’s nothing that say’s you’ve got a business more than employing staff. However, doing so brings with it all sorts of obligations. And they’re the same whether you employ 1 person or 100.

Employee records required

For every employee you must have an employee file to keep their records in, this can be a physical file or an electronic file. The documents you must keep on file include:

  • A completed IR 330 tax declaration from an Employee – if you don’t you must deduct tax at 45%. It’s their job to tell you what their tax rate should be.
  • A written employment contract – failure to do so can result in a $20,000 fine
  • Copies of job descriptions / task lists
  • Any notes from staff appraisals

Employee entitlements and further records required

There are 6 weeks and 1 day that you pay your employee not to even walk in the door.

Every employee is entitled to 4 weeks holiday a year and there are 11 statutory holidays in NZ. Then they’re also entitled to 5 days sick leave per year, which can be accumulated up to 20 days, bereavement leave for certain family members and even a new father is entitled to 2 weeks parental leave, though this is unpaid.

It’s important to keep regular and clear records of all your staff leave taken. Most computerised payroll systems can record this, but if you’re calculating payroll manually you will need to keep separate records.

If you think that your employee records are not complete or need help setting up appropriate records we can help, give us a call.

Payroll records

You need to keep records of what you’ve paid someone and any deductions you’ve made on their behalf each month. It’s your obligation to deduct the tax, any student loan repayments, KiwiSaver and any other deductions set by the IRD. Failure to pay this on to IRD is theft and can result in being sent to prison.

Once again, a computerised payroll system will keep all these records. Talk to us if you think you need to update your payroll system, or even if you find this just all to much to fit in. We could do this for you.