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What is payroll? Payroll rules and regulations Keeping accurate time records Payroll systems or software Further informaiton Additional resources

Managing payroll is an essential part of a dairy farming business. There are many legal requirements to ensure employees receive the appropriate wage for their work at the right time and matches what is stated in their employment agreement. As an employer you also need to understand deductions like PAYE and KiwiSaver and how to keep clear records.

What is payroll?

Payroll is the process of paying employees. It starts with the information you need to collect and hold when an employee starts and includes the tools you use to collect information on hours worked and how you calculate and make payments.

A payroll system or software is what many businesses use to automate this process and pay the correct amounts of money to the right people on the required dates.

A payroll system makes pay transparent, decreases misunderstandings, and protects your farming business.

Payroll rules and regulations

To ensure you pay your employees correctly you must:

  • Pay all employees in line with their employment agreement.
  • Ensure their pay for any given pay period is above the minimum wage (or in the case of international employees on work visas, that their pay is above the required minimum thresholds ). Seasonal averaging is not acceptable.
  • Ensure leave and holidays are accounted for and paid correctly.
  • Use the right calculations to ensure employees receive the correct payments for leave, statutory days and holidays.
  • Record hours worked and pay employees that have varying hours correctly.
  • Deduct PAYE and send these payments to the IRD.
  • Make any deductions necessary eg. WINZ, KiwiSaver etc.
  • Make a payslip available.

You are legally required to keep your employee, time and pay records for at least seven years.

Keeping accurate time records

If you are not recording accurate times and hours of work, you may not be paying employees correctly, creating unnecessary risk and concern around minimum wage.

Our research shows that nearly half of employers are not paying employees at the agreed rate for all hours worked. This opens your business to significant risk and is damaging to the employment relationship.

Many timesheet and recording systems are available to help you get and keep accurate data. More information on timesheets can be found here.

Payroll systems or software

Completing pay calculations on simple spreadsheets and using IRD/MBIE tools can be sufficient when doing your payroll. However, with increased regulation and record keeping required when paying employees, having a good payroll system or software can be a cost and time efficient investment.

Payroll systems for the agricultural sector

Several payroll companies have partnered with the rural sector to provide customised systems for farming businesses.

Many rural accounting businesses will also provide a payroll service to their clients.

Things to look for when choosing a payroll system

There are several payroll systems available to New Zealand businesses. Before committing to a system, ensure it meets all of your requirements. Here are some areas and functionality to look for when choosing a payroll system :

  • Number of employees it must serve
  • PAYE
  • Rent
  • KiwiSaver
  • Employee Superannuation Contribution Tax (ESCT)
  • Leave - annual holidays or annual leave, leave without pay, parental leave, sick leave, bereavement leave, public holidays not worked
  • Minimum wage compliance
  • Top-up payments when employees work additional hours
  • Final pay
  • ACC payments

It’s also important to understand what support is on offer from the provider of the system. If it is just software, then you will need both technical and legal knowledge to operate the software effectively. If there is advisory support the provider will likely offer various levels of support. Make sure you choose the level of support that’s right for you.

Further information

Last updated: Apr 2024

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