IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.
Taking the step to employ staff is a big one. But the reality is that your business can’t grow much with just one person. There are lots of details to know about when you are an employer, so getting good advice is essential (and doing what your mate does may expose you to the same legal issues he is exposed to, even if he doesn’t know it – so ask a professional, not a friend).
You need to know about your obligations relating to Employment Contracts, Health and Safety, PAYE, Holidays Act and KiwiSaver (to start with). The Ministry of Economic Development have a great website (http://www.business.govt.nz/compliance/paye-and-employment-regulations/becoming-an-employer) with lots of resources and links.
Here are some steps you need to do when you start out employing new staff:
1. Get Employment Contracts for all staff
Go to the Department of Labour’s Employment Contract Builder for a free (but generic) service.
2. Register as an Employer with the IRD
Complete IR344 online at the IRD’s website – it only takes a couple of minutes. Once you have registered you must file monthly Employer PAYE schedules. There are still penalties for late filings.
3. Get an online payroll service provider
While you can do it yourself, it’s getting much harder these days. We have set up several clients on Crystal Payroll and it handles holiday pay, KiwiSaver, ESCT, and the IRD monthly filings all for $199/year for small employers!! Can’t beat that! Please call us for a referral.
Things to think about in the process:
- If you are charging out time you need to work out a rate for your staff – we can help you determine the best method to calculate this.
- If you intend to use the 90 day trial period you MUST get the Employment Agreement signed BEFORE their first day of work otherwise it will be unenforceable. We’ve got a good checklist of things to do when hiring staff – call us.
- Most staff are automatically enrolled in KiwiSaver. You are required to match their 2% contribution. You must now deal with Employers Superannuation Contribution Tax on the Employer’s contribution (as part of your monthly PAYE report to the IRD). This is where payroll software make sense as the forms are getting harder to fill out.
- ALL staff are entitled to annual leave or holiday pay. Ensure that you are dealing with their holiday entitlement correctly. Paying 8% along with their wages does not necessarily exempt you from having to give then paid annual leave. It is important to review this when an employee changes from a casual or fixed-term employee to a permanent employee
Call us for any further assistance with setting up your business, non-profit or employment arrangements. Get our Employer Documentation Kit
Our Employer Documentation Kit provides essential documentation to help businesses maintain sound record-keeping systems on employment matters.
The Kit includes checklists, forms, and letters to use to comply with the fundamental documentation requirements of the Employment Relations Act 2000 and Holidays Act 2003.
The Kit doesn’t include employment agreements, contracts or appraisal systems. This is because there’s no one-size-fits-all when it comes to contracts (so it would be inappropriate for us to provide such documents to you). The Kit doesn’t replace specialist employment advice from your legal advisors on a case-by-case basis.
If you have any questions about our Employer Documentation Kit and how it can help you, please don’t hesitate to call us. The kit costs $99+GST.
