Payroll & Leave Management

The following pointers are a must for Payroll & Leave Management: -

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Why do you need to manage leave professionally

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Managing Payroll

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Using digital technology to make it simpler

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Together combining leave and payroll

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A straightforward all-in-one solution

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If you asked people what things are essentially important in their working lives, getting paid and taking leave will be certainly on the top of the list.

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Earning money is the fundamental premise for going to work, and, by law. Therefore, in principle, all employees are being paid at the minimum wage for their labour. However, if a person does not get paid the right amount or doesn't get it when they should, they will quickly get discontented with their employer.

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The same goes for taking leave the ability to take leave is to value the employment law because it helps give employees a work-life balance in their lives and family. Leave taken away from work – whether for a holiday, family reasons, or recuperate – is vital to everyone's health. It keeps people fresh and motivated, reduces stress, and improves confidence and productivity.

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Most businesses understand how vital these things are and must invest time and resources dealing with leave and payroll. But despite all the attention, it is not always easy to get them right. For example, payroll involves a lot of data: maintaining a record of the hours each employee works, calculating how much they should get paid, the required deductions needed towards tax, and other payments as outlined in the collective, and ensuring they get the correct amount they have earned when they should.

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On the other hand, leave takes a lot of handling, from marrying up leave requests with leave balances and keeping up with legal compliances in handling leave requests, paying at the correct calculations, and processing payroll again.

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There are potential errors at every step – mainly if any parts of the process are manually processed. – and errors can cost a lot more than getting offside with your employees. For example, no company wants the Inland Revenue Department (IRD) or the Ministry of Business, Innovation, and Employment (MBIE) to be on their backs because they made serious mistakes or paid their employees wrongly.

In this blog, we take a good look at meaningfully handling leave and payroll, why it is necessary to do them correctly, and in this way, your business can make both processes more manageable and accurate.

Why do you need to manage to leave effectively?

For a small business with few employees, keeping track of leave might seem pretty straightforward. An employee asks for time off, checks this against their leave balance and entitlement, and either approves or denies the request.

But the main factor is that different types of leaves have separate rules for calculating entitlements and payments – whether it is annual leave, parental or sick leave, or public holidays –. Suddenly, tracking and managing leave become more complicated, especially for large businesses or companies with employees who work irregular hours or have different work rosters.

As per the Holidays Act 2003, businesses are legally bound to grant each employee their exact leave entitlements and pay them when entitled. Employers must also keep correct records of each employee's leave accrues and taken, their daily work hours, and the payment for those hours worked.

An accurate, competent leave management system is essential for reducing or removing mistakes and keeping your business in line with the law.

There have been many high-profile cases of organizations becoming a cropper by not managing and paying leave properly in current years. As a result, employers can end up owing large, retrospective leave payments or receive heavy fines from the Labour Inspectors or Employment Relations Authority (ERA) for not complying.

Aside from helping meet your legal compliances, effective leave management helps keep the business running smoothly and reduces costs.

Employees taking time off has a significant financial impact on a company's bottom line, with added expenses like finding, paying, dealing with contractors or casual workers, or giving the existing employees overtime.

If you correctly plan your employees' leave, you can be sure that you have sufficient cover, rather than having to struggle and the possibility of getting caught short. Of course, your employees will likely forgive situations beyond management's control, such as an infectious cold. Still, no one wants to regularly increase their workload because the company didn't correctly plan holiday cover.

Good planning will help the business preserve productivity and the quality of its goods or services, keeping your customers contented.

Ensuring your employees get the right amount of time off this will them healthy and happy. Taking leave from work is necessary for every employee: it improves their work-life balance, eases stress and unplanned days off, and strengthens long-term performance.

If employees know their leave requests are managed correctly and are getting their correct leave privileges, they will have more faith and trust in your business and further motivate them to help you succeed.

With effective leave management, paying employees correctly and on time needs to be taken sincerely if your business to be successful.

For starters, all businesses must meet a host of legal obligations under the many laws that cover payroll processing, such as the Wages Protection Act 1983, Minimum Wage Act 1983, Income Tax Act 2007, Employment Relations Act 2000, and Holidays Act 2003.

The most basic payroll process must confirm that employees are paid at least the minimum wage and at the frequency mentioned in their employment agreement, managing with the acceptable method (cash is the legal default).

You must make the appropriate deductions to include PAYE, including the ACC earners' levy for employees or tax on schedule payments (formerly withholding payments) for certain contractors. Then some deductions may be needed, such as Kiwi Saver, ESCT (employer superannuation contribution tax), child support, student loan repayments, payroll giving, lump-sum payments and bonuses, allowances, and particular benefits you pay.

It is compulsory to keep records for the number of hours each employee works each day in a pay period and receive payment for those hours (a statement of those hours and pay for those hours if worked regularly), as well as planned leave and leave, and retain them for at least six years.

Even for a small business, running and processing payroll require sample time and resources, primarily if handling the process in-house using manual (or semi-manual) systems. But thinking of the impact when cutting corners or having sub-par practices might have on the company.

Employers and management are the ones eventually accountable for any payroll mistakes. Failure to calculating and employees pay correctly could result in arrears being due or fines from a Labour Inspector, the ERA, or IRD. Also, any interest and possible legal if your workers, depending on their income and pay mistakes, will negatively affect their confidence and loyalty to the company. A US study revealed by the Workforce Institute at Kronos found that 49% of workers would start looking for a new job after encountering just two significant issues with their pay (24% would look for another job after their first payroll miscalculation).

So nevertheless, your business handles payroll or uses an outside service provider; the person or team in charge of payroll is significant to your business.

Timekeeping and pay records must always be up-to-date and correct at all times. Any changes to an employee's hours, pay, or operational arrangements must be updated right away, and any adjustment to the day or rate of payment must have their written permission. Employment laws also change constantly, so the business needs to be aware of it and meet its responsibilities.

Staying watchful is key. If you accept rather than check that the numbers and records are accurate, there is a good chance a mistake will creep in overtime.

With a perfect, professional payroll system, good data records going in should guarantee good results with the coming out. This will get you on the right side of your employees and the law and give you a meaningful awareness of your labour costs, impacting hiring and investment decisions and long-term profitability.

Integrating leave and payroll

Integrating two systems has some real benefits once you have switched to using software or online leave and payroll management solutions. The two functions are inherently connected and primarily use the same employee information, so it makes sense to share the same database. Data need only to be entered once, making it smarter and easier to update and control time and attendance, leave, pay, and tax records.

Lessening or removing duplicate work boosts productivity and decreases the chances of errors from poorly entered data, omissions, or delays in communication. Decreases in admin and labour costs and also save the business money.

Management will get a more accurate oversight of absences, leave patterns, and how much labour and leave are costing the business with an all-in-one solution. This, in turn, supports better workforce planning, labour budgeting, and more decision-making.

The integration will also give employees adequate access to and a clearer view of their leave, pay, and benefits. This helps to clarify, avoid misunderstandings, increase trust, and prevent management and HR staff from the precious time they would otherwise spend resolving other straightforward queries.

The business information systems are integrated with more accurate information on employees ' leave entitlement and pay calculations – not just payroll and leave but all HR and people management tools. This is mainly important for businesses that have employees working on irregular hours and pay rates.