Good Record Keeping will save Employers Lots of money

Thursday 8 August 2019

Good Record Keeping will save Employers Lots of money

In New Zealand, employers must keep complete and accurate records of wages, time, leave, and other details.

Good record keeping ensures that the employees’ pay and leave are correct. It also prevents misunderstandings and protects both parties if there is a problem.

Employers must have a clear record of the hours worked by the employees and payment of wages for each pay period. What is required to record the hours worked depends on circumstances. If the employee has fixed hours each week, then the hours recorded in the employment agreement or roster may be sufficient to record the hours worked by the employee. If an employee works additional hours to the usual hours, then a record of the additional hours must be kept. While timesheets are not compulsory, keeping accurate records is easier if employees do fill out timesheets.

Employers must also have a clear record of what leave entitlement an employee has at any time, whether it be annual leave, sick leave, bereavement leave or other leave.

Employers must also understand clearly employees’ entitlement regarding public holiday. If an employee normally works on the day on which the public holiday falls, then the employee must be paid for the public holiday. If an employee works on a public holiday, the employee must be paid (at least time and half) for the hours they work. In addition, if they normally work on that day, they are entitled to a full day off. This day off is called day in lieu. That is to replace the public holiday they lose. It is up to the employee (not the employer) to decide whether to take the day in lieu, or to be paid out for that day.

If any employee chooses to give up their day in lieu for payment, it would be important for an employer to keep documentation to show that the employee made that choice. This avoids any questions in future that the employer had forced the employee to take to forgo the day in lieu.

Most employers are aware that they must have employment agreements. The agreement will normally provide the kind of work the employee is employed for, the hours they are required to work, and the pay for those hours.

When employment ends, the employee must be paid out holiday entitlement that has accrued up to that point.

The employer must retain a record of all payments made to the employee, and a copy of the tax code declaration IR330 provided by the employee when they commenced employment.

What happens if an Employer does not keep accurate records?

In that case, the Employment Relations Authority or Labour Inspector may give the employer a penalty. This could be up to $50,000 for an individual; or for a company, the greater of $100,000 or three times the amount of the financial gain made. A labour inspector may also issue an infringement notice for breach of the record keeping requirement.

Above all, if there is a dispute, and employer may struggle to substantiate any claim that they had paid the employee correctly or had accounted for the leave entitlements for the employee correctly. This opens up employers to claims by employees for compensation.

These are not just hypotheticals. Time and again we have seen employees complaining to Labour Department or making a claim when the employment relationship breaks down. The employer often ends up paying thousands of dollars in penalties or damages. It may also affect the employer’s ability to employ overseas workers.

It is a worthwhile investment to set up systems for good record keeping and having a good payroll system. This ensures that the right information is collected, stored and filed automatically.

Teresa Chan

8 August 2019