By Sascha Nicoll

To help business owners and managers stay on top of their HR compliance, our team of advisors at HR Assured have created this factsheet; it covers some of the minimum employment standards which everyone has heard about, yet so many times employers get wrong!

As a bonus, at the end of this article, you’ll be able to download our HR compliance health check – a handy tool to guide you through a basic HR audit. Now, it’s time to uncover some facts!

Fact 1: minimum wage does not include an employer’s Kiwi Saver contributions. 

Do you pay wages or salary which are inclusive of Kiwi Saver? If you answered yes, you need to ensure you’re paying workers at least the minimum wage, after deducting your three per cent employer contribution.

Below are the three categories of minimum wage and the current rates as of 1 April 2021:

  • Adult: $20.00
  • Starting out: $16.00 an hour
  • Training: $16.00 an hour

For more on minimum wage and how to ensure your business is compliant with the Minimum Wage Act, read this blog.

Fact 2: casual employees have irregular patterns of work, with no guarantee of ongoing work. 

The moment you have casual employees who begin to work regularly (such as every Monday or the same number of hours each week) you’re at risk of that employee being deemed permanent and having to backpay any annual leave entitlements.

Do you know the three characteristics of a casual employee? They are as follows:

  1. They don’t have to say yes when asked to work;
  2. The casual employee doesn’t expect regular or ongoing employment; and
  3. They get paid their annual leave entitlement as an extra eight per cent of their ordinary pay.

For more on managing the challenge of casual contracts, read this blog.

Fact 3: You can’t use fixed-term contracts to simply ‘try someone out to see how they go’.

Even though some employers would like to, you can’t use fixed-term contracts to simply ‘try someone out to see how they go’ or use them to avoid the long-term commitment and costs of employing a permanent employee. These are not considered genuine business reasons and could land you in hot water if used in this way.

If you’ve decided to hire fixed-term employees, there are three key things you need to know:

  1. there must be a genuine business reason based on reasonable grounds for the fixed term, and you must stipulate this in the employment agreement;
  2. you must tell your employee about this reason;
  3. there must be a start date and finish date or end circumstance for the fixed-term contract.

Another complexity around fixed-term contracts is annual leave entitlements. Read this blog to learn more.

Fact 4: failure to ensure written agreements are in place can result in fines of up to $1,000 per employee.

Under the Employment Relations Act 2000, every employee must have a written employment agreement, either as an individual or collective agreement. A contract of employment is crucial because it outlines the terms and conditions of the relationship between an employer and an employee.

Fact 5: if you terminate an employee during a valid trial period and with the right amount of notice, they can’t bring a personal grievance for unjustified dismissal.

A trial period is only valid if you have 19 or fewer employees and your employee signs their employment contract before their first day of work. Trial periods can be for 90 days or less and can only apply to new employees who have never worked for your business before.

You don’t have to give reasons for the dismissal during a trial period unless the employee asks for one. However, it’s sometimes good for the employee to be made aware of the reason for termination in these situations.

A word of warning here; an employee on a trial period can still bring a personal grievance on grounds other than about their dismissal, for example:

  • if their contract didn’t contain a trial-period clause;
  • on the basis of discrimination; or
  • if they feel that they were unjustifiably disadvantaged.

Fact 6: an employee on a probation period can still raise a personal grievance on the grounds of unjustified dismissal.

Unlike an employee on a trial period, you can’t lawfully terminate an employee at the end of a probation period without following a proper process. You must first have assessed that employee fairly and, if their work wasn’t good enough, you must then provide feedback on why they didn’t meet your expectations while on probation. Only at this point can you let that staff member know that you intend on ending their employment.

Your employee has a right to respond before you proceed with termination. After this, if you still wish to continue with offboarding your employee you must ensure you give the correct notice as outlined in their employment contract.

An employee on a probation period may raise a personal grievance for unjustified dismissal for reasons such as:

  • they weren’t provided with appropriate support and training;
  • they think that the reason you dismissed them wasn’t a good one; or
  • that you didn’t fairly assess them.

Fact 7: employee handbooks are not a legal requirement, but they are an essential tool for setting expectations in the workplace.

Employee handbooks make it easy to communicate your key company policies to employees and call me bias, but I think every business should have one! While most employment agreements refer to workplace policies and contain clauses requiring employees to follow them, it’s your responsibility as an employer to ensure all new and existing employees know about your company policies and where to find them. That’s not all; every time you update a policy, it’s your job to alert your staff members to the changes.

Another hot tip to help you communicate and enforce your HR policies is to run regular refresher training (annually, for instance) around important company policies such as bullying and harassment, workplace equity and non-discrimination.

Fact 8: Seven years; that’s how long you must keep accurate wage and time, and holidays and leave records for your employees.

This seven-year rule is a legal requirement under the Employment Relations Act 2000 and applies to all employees, even after they’ve left your business.

As an employer, you must keep daily records of your business activities and a range of up-to-date information about your employees. Good record-keeping is essential to prevent misunderstandings and protect you and your employee if there’s ever any issue or dispute.

I’ve included a list of record-keeping essentials below. As you can see, there’s a lot of information. You can make your life a lot easier by using a payroll software system and HR software like HRA Cloud to track and store employee information and workplace documents online.

Record-keeping essentials

  • Name, postal address, age (if under 20 years old).
  • Start date.
  • Type of employment agreement and a copy of the agreement.
  • Type of work.
  • The number of hours worked every day in a pay period and pay for those hours.
  • Wages paid in each pay period and calculations.
  • Dates of leave taken, and payment received for each.
  • Annual holidays and sick leave entitlement dates and current entitlement to annual holidays and sick leave.
  • Details of any employment relations education leave taken.
  • Any annual leave cashed-up as well as the date and amount paid for each entitlement year.
  • The dates and number of hours worked on public holidays and the payment for these.
  • The dates of, and payments for, any public holidays or alternative holidays they didn’t work but we’re entitled to holiday pay.
  • The cash value for any board and lodgings provided.
  • The cash value of any alternative holidays they gave up for payment.
  • The date when employment ended, and the amount of holiday pay they received at the end of employment.
  • A copy of their tax code declaration (IR330).

Fact 9: well-written job descriptions can help with managing work-related performance.

Although not a legal requirement, keeping copies of detailed job descriptions is highly recommended; well-written job descriptions can help outline your expectations around an employee’s role. They’re also fundamental to setting performance expectations for annual appraisals and pay reviews.

Fact 10: it’s not a legal requirement to issue payslips to your employees every pay period.

Payslips are another essential record type for your business. It’s a little-known fact that it’s not a legal requirement to issue payslips to your employees every pay period. 

In saying that, you must provide an employee’s payslips to them and make them available whenever they ask to see their pay information. So, to manage queries (or disputes) quickly, I’d recommend providing payslips to your employees as soon as possible after every pay run.

When it comes to payroll, using manual systems can make accurate record-keeping difficult to maintain but don’t be fooled into thinking payroll software is perfect either. If you’re using computerised payroll software, you still need to check that it’s accurately recording any changes to employees’ hours and pay – especially after a change in pay rules and regulations.

Free tool to audit your business

The 10 HR facts above might surprise you, but they cover some quintessential HR requirements that every business owner needs to know. If you want to take your HR compliance a step further, download our free HR Compliance Health Checklist below, which will help ensure your business is compliant with minimum employment standards.

If you’re a client and you have a question about workplace compliance, contact HR Assured’s 24/7 Telephone Advisory Service.

If you’re not already an HR Assured customer and you’d like to try our award-winning Telephone Advisory Service, contact us for a FREE no-obligation consultation.

Sascha Nicoll is an Employment Relations and Safety Consultant at HR Assured New Zealand. She has over 15 years of experience working in the HR industry in both consulting and in-house roles. Sascha supports business leaders on various workplace matters, including people management, health and safety, procedural development, and HRIS support.