Around around the merry-go-round.
The following letter was sent to the then-minister back in 2019; it was resent in 2022 to the new Minister, and now, in 2024, we will try again with the new government and another new Minister.
NZPPA sees this as an essential area that needs support to drive legislative change.
Updated overview
There have been ongoing issues with employees finding they have not been paid correctly in the media and from investigations carried out by MBIE over many years. For payroll, we need to be proactive in showing we are focused on paying our employees correctly.
As stated in the letter below, it is not about creating more work for payroll. It is about giving more certainty to employees each payday. Payroll needs to be more transparent (along with the payroll systems they use) and open so that employees can clearly see what they were paid and when they were paid. This is also about payroll being a leader and building payroll as a recognised profession in New Zealand.
10 March 2024
Right Honourable Brooke van Velden
Minister for Workplace Relations and Safety
Private Bag 18888
Parliament Buildings
Wellington 6160
Dear Minister
OPEN LETTER – WHY PROVIDING PAYSLIPS SHOULD BE A LEGAL REQUIREMENT IN NEW ZEALAND
Back in 2019, the following letter was sent to the then Minister; it was resent in 2022 to the new Minster, and now, in 2024, we wanted to see with a change in government if there was also a change in interest to help business (and payroll) to be more proactive in trying to resolve payroll issues to employees. The leading cause is legislative issues (especially with all the current and ongoing problems with the Holidays Act 2003).
Established in 2007, the New Zealand Payroll Practitioners Association (NZPPA) represents over 1500 members in the payroll industry. Its purpose is to develop payroll as a profession, and we provide payroll technical training throughout the country and anywhere in the world where New Zealand payroll is processed. We provide a PayTech Adviceline for our members, and every day, we answer dozens of questions relating to how employees have been paid, with over 90% of questions relating back to the problems of how employees have been paid under the Holidays Act. One of the most significant areas with the Holiday Act is not actually from the act it is from the lack of transparency in how the payroll system is actually calculating an employee’s leave payment.
Over many years, we have seen many cases in which an employee has not been paid correctly at NZPPA. I would like to propose an easy option to help resolve this issue: giving employees more transparency over what they have been paid and when they are paid.
In New Zealand, there is no legislative requirement to provide a payslip to an employee; however, many employers do this anyway, and in some cases, it is an agreed term included in the employee’s employment agreement (usually, it is found in older collective employment agreements). If there were a legislative requirement to provide a payslip to an employee for each pay, then this would allow an employee to clearly see what has been paid concerning the work they have undertaken and what payments have been agreed upon in their employment agreement.
Overseas, it is common to see a legal requirement to provide a payslip to an employee when they are paid. In 2019 in the UK, there was an additional requirement to include on the employee’s payslip hours worked for the purpose of “increasing transparency over whether employees are paid correctly” (UK Employment Rights Act 1996 (Itemised Pay Statement) Order 2018). Under the Fair Work Act in Australia there is also a legal requirement to provide an employee with a payslip. The payslip must be provided within one working day of paying an employee.
If it is a legal requirement for an employee to be given this information each pay, they can question their employer at that time (especially pay for leave that has been taken). If they cannot get payment questions answered from the payslip or no payslip is provided, they can then escalate the issue to the appropriate body. On the investigative or enforcement side, this would assist the employee in getting information from an employer in a clear, concise, and easy-to-understand form. A payslip would be an additional report that would include wage and time and holiday and leave records, which are already provided in the legislation. However, a payslip is a much more practical and employee-friendly record.
If a payslip is to be provided by legislation, it is essential to clearly state what information has to be on it as a minimum so that this can be standardised. Any information on a payslip must be in plain English so that an employee can easily understand. The employee can then be educated on what they are looking at on their payslip so they can question their employer if they have concerns about what the information shows.
One of the issues that would be raised if this were to be implemented would be the additional compliance costs to the employer in providing a payslip to an employee. This is not an issue for payroll providers, as all existing and modern payroll systems already have some payslip option. A payslip is just a reporting option from a payroll system and would not be a significant development cost. To reduce ongoing compliance costs, it would be essential to ensure a payslip could be provided in several ways using technology instead of printing paper payslips.
I would suggest that if included in legislation, there be a clear requirement that if a computerised payroll system is used, that system must be able to provide a payslip so employers are not forced to find other options when the payroll provider does not include it in their software. I started in payroll counting money and handing out paper payslips many years ago, and payroll does not want to return to that
(please!).
As part of the Holidays Act review and MBIE’s Better Rules Project, there had been a section on providing a payslip to show the background of the calculations, impact on entitlement, etc. We don’t need the over-the-top complexity that the previous failed government experiment to develop a new Holidays Act went through for over five years (with no outcome to show for it). We need a simple, plain-language pay slip that is clear to employers (especially small businesses) and employees.
I have provided this as a very high-level overview of how, if included in the legislation, a payslip could help employees see and understand what they have been paid at the time of payment so they can question their employer to resolve any issues before they become anything significant.
I see this as a proactive, positive and timely step in the present environment, where payroll could help resolve a lot of the issues that are regularly being reported in the media of employees not being paid correctly. The bottom line is that providing a payslip should be seen as proof of payment and part of legislative requirements as part of payroll best practice.
I am happy to discuss this important issue further and would be grateful if you would consider it.
Yours faithfully
David Jenkins
Chief Executive Officer