Category Archives for "payroll FAQ’s"

5 Tips to Avoid Holiday Pay Drama

Are you dreading your staff complaining about their holiday pay? Here are some ways to avoid the pitfalls. Holiday Pay can cause a lot of stress and so learning some simple rules can help smooth the way to better employee relations. 

For example; Annual Leave holiday pay is treated differently from Public Holiday pay and so you cannot assume that paying the normal weekly or daily amount will be correct. The way this must be calculated is that the average weekly rate over the previous 12 months, or the regular weekly rate can be paid - whichever is the higher. 

Here are some simple tips to keep in mind:

  1. Set up your systems correctly. You must load 52 weeks of historical pays for each employee to get the average rate.
  2. Keep accurate records, record sick leave taken, days absent without leave, conversations about performance or misconduct. Don’t fudge it.  7 years records are required by law.
  3. Make sure all staff have a comprehensive Employment Agreement and update with any changes to the law.
  4. Set up a simple file for each employee. Keep notes of changes there or in your payroll program.
  5. Keep track of hours worked if they fluctuate. Require staff to fill in time sheets.
  6. Annual Leave, and Bereavement, Sick and Public Holidays are not calculated the same way - get familiar with the rules.

Here is an excerpt from an excellent article by Jess Logan:

"The purpose of the Holidays Act is to promote a balance between work and employees’ personal lives and provide employees with minimum entitlements to:
  • Annual holidays to provide the opportunity for rest and recreation
  • Public holidays for the observance of days of national, religious, or cultural significance
  • Sick leave to assist employees who are unable to attend work because they’re sick or injured, or because someone who depends on the employee for care is sick or injured
  • Bereavement leave to assist employees who are unable to attend work because they have suffered a bereavement

to read more go to -

90% of the calls we get regarding payroll relate to holiday pay. Good record keeping, utilizing a payroll software program, and being up to date with current legislation goes a long way towards having a stress free payroll.

Holiday Pay Headaches

Xmas is coming yet again. But before we can swap the keyboard with a glass of wine many of us need to prepare holiday pays for the shut-down. Yes, it’s a headache but one which can be mitigated if you take the time now to plan it.

Whether you use MYOB Payroll, ACE Payroll, IMS Payroll, EXO Payroll or Essentials payroll the legislation surrounding HP is the same.  And you must comply.

​Our tips for processing pays over the shutdown:

  • Run the Holiday pay report mid-December and check leave balances for accuracy. If leave is not shown on payslips, now is a good time to communicate the leave available for each employee. Employees can take any lieu days they have saved as well as their annual leave. We recommend staff complete leave forms.

  • If you shut down for say 3 weeks run 3 individual pays as opposed to one pay of 3 weeks. The tax will be correct and you can schedule the payment to be uploaded to the bank on the right date. This helps your cashflow and will help your employees budget.

  • If some staff work some hours over the shutdown or have extra time off then do a wash-up pay when you return to work.

The legislation in brief

Employees working on a public holiday are entitled to 1.5 times ordinary pay as well as a day in lieu. Only open on public holidays if it makes good economic sense or you have no choice.

Employees get a paid day off on a public holiday if it’s a day they would have normally worked on.

It is very important to calculate the right rate of pay for leave and holidays. Annual holidays are calculated differently from public and alternative holidays, sick and bereavement leave.

Payment for annual annual leave is made at the start of the employee’s holiday and paid at a rate which is the greater of the employee’s ordinary weekly pay or average weekly earnings.

This must be calculated each time the employee goes on leave as the appropriate payment rate may change even from pay period to pay period.

Annual holidays are paid at whichever rate is the higher of:

  • the employee’s ordinary weekly pay at the beginning of the annual holiday, or
  • the employee’s average weekly earnings for the 12 months just before the end of the last pay period before the annual holiday.

Your payroll should work this out for you. Expect to pay a higher rate over shutdown particularly for waged/hourly employees.

Sick leave, bereavement leave, alternative holidays and public holidays are paid at the rate of either relevant daily pay or average daily pay.

Relevant daily pay means paying an employee what they would have earned if they were at work on the day. This also includes payment such as commissions, bonuses & overtime if the employee would have received them on the day. If it’s not possible or not practical to work out relevant daily pay, or because an employee’s daily pay varies in the pay period in question, an employer may use average daily pay.

Tax on KiwiSaver (ESCT)

The monthly IRD reports are causing some confusion for clients running a computerised Payroll program. The schedule doesn’t include a column for the ESCT tax but the remittance advice does.

The Employer monthly schedule (IR348) prints figures for Gross Earnings, PAYE, SL, and KiwiSaver. It doesn’t show the tax (ESCT) on the Employer contribuion.

See the screen below (click on the image to enlarge)



The Remittance advice (IR345) prints all figures (including the ESCT tax). You must pay the amount circled in red. See the screen below:



It is very important you print and use both forms above. Some employers are just printing the IR348 and underpaying the IRD by the ESCT (the IRD don’t like that..!)


How do deal with the tax on a Bonus?

How do I pay staff a bonus and deal with the tax?

Bonuses are commonly used as staff incentives; however there is often confusion about the tax on bonuses paid.

There are two types of bonuses:

  1. Regular bonuses

Ones that are paid periodically and should be included in the employee’s gross earnings.

These must be set up as Gross Earnings pay codes. For the tax on a regular bonus, refer to the IRD website or your tax tables.

Note: All amounts paid to employees as part of their agreements or paid periodically must be included in their Annual Leave and Holiday Pay calculations.

  1. Gratuitous or “one-off” bonuses

These amounts would not be included in the employee’s Annual Leave and Holiday Pay calculations. These bonuses need to be set up as a Taxable Allowance pay code. To tax the bonus correctly, use the Tax Override button, enter the bonus amount and then choose the Tax code appropriate for that employee (see screen below)

Tax Code – Annual income from all sources is likely to be:

$14,000 or less                      10.5%  – Use SB
$14,001 or $48,000                   17.5% – Use S
$48,001 to $70,000                  30.0% – Use SH
More than $70,000                   33.0 % – Use ST

Integrate MYOB Payroll to MYOB AccountRight

MYOB Payroll seamlessly creates and sends a .txt file through to MYOB AccountRight every time you finalise a pay.  Integrating takes a bit of painstaking work to get right but is really worth the effort.

Integration saves a lot of manual entering and both accounting and payroll agree for evermore. It is much easier to balance your PAYE account if you do this and should always reconcile.

If your not confident, get some help to set up integration from an MYOB Certified Consultant who has plenty of experience. The trick is linking Pay codes and/or cost centres to the correct general ledger accounts.

Having set up the linking, TEST to see that the journal is giving you the desired result. If not then go back to Payroll and do some more tweeking. I do it by creating a test pay for one person with all the deductions and allowances available (including having an employee who is a KiwiSaver member). Take a backup to the desktop BEFORE you finalise the pay, then check the journal in MYOB Accounting. You can restore your payroll and then delete the journal entry in accounting once testing is complete.

PS Where does the KiwiSaver Employer Contribution of 3% go? It codes to your usual 6-XXXX Wages  & Salaries account but the amounts are obvious so you can journal the amounts to 6-XXXX Superannuation later.


MYOB Payroll – Backup & Restore

Question: I have just started with the MYOB Payroll software. I have a question just in regards to the backing up of the payroll file.

I have saved them (backed up) onto a flash stick  (I also saved it onto my C drive). However when I went to open them up I couldn’t read them. It was a whole lot of gibberish! Other than the backing up I do, does the MYOB software store copies on my Hardware also? Also I have a password to open up the MYOB package, would that have anything to do with the fact that I cannot read the save timesheets etc.

Answer: Just as with MYOB Accounting, a backup in MYOB Payroll is a compressed, or zipped, file. Yrestoreou cannot open this file as it is; it needs to be restored before the information can be read.

Care needs to be taken when restoring a Payroll backup. It will overwrite your current file, so if you want to get back to how things are currently, be sure to have a backup of that current file.

To restore the backup, open MYOB Payroll, and select Restore from the File menu at the top of the screen. Point it towards the backup you wish to restore. You will be warned that the restored data will overwrite the current data.

Suggestion: If you want to check a payroll backup to see what you have done, then create a dummy payroll called “Bingo” then restore your backup over top of this one.



How can I view previous pays & reprint payslips?

You can view employees pay history and reprint past payslips.  From Maintain Employees section, select the Pay History tab.

To reprint a previous payslip, double click on the payslip concerned. It will open.

At this point the payslip may be printed or emailed.

Note that the leave on the payslip will be the current leave not as per the date of the slip.



Payroll – Quick Tips & Shortcut keys

Find below some fairly random tips for those of you who use MYOB Payroll

  1. Take care setting up new employees – make sure you go to each tab in Employee Maintenance and remember to set up their standard no of hours and days per week.
  2. Always remember to finalise a pay. You backup first and then you finalise the pay.
  3. You will find a PAYE Calculator in the ‘tools’ section of the menu. This is handy for checking actual PAYE, Student Loan, KiwiSaver amounts if you are asked.
  4. When paying out sick leave, remember to enter the actual date the sick leave relates to.
  5. Only ever use the Annual Leave code to pay out leave taken. The holiday pay code is just used for termination pays and for casual employees.
  6. You can fix up incorrect pays in the next pay run or you can run a one-off pay.  Just enter a negative figure in the quantity field of enter pays. While you cannot reverse a finalised pay, you can manually enter pays which ‘reverse out’ a previous pay.

The following shortcut (function) keys can make things quicker when using MYOB PayrollContinue reading

How to remove ex-employees from MYOB Payroll?

Normally employees should be finished using the Final Pay button in the Enter Pays screen which will pay out any annual leave and alternative leave balances. If this isn’t done the employee will continue to appear in the payroll and show in the IRD reports. If you have old employees who have finished, follow this procedure.  Note you cannot delete ex-employees, but a ‘Finish Date’ can be entered.

Finishing an “Ex-Employee”

1. Go to Maintenance > Maintain Employee > Select Employee

2. Within the employee’s “Leave Details > Annual Leave & Holiday Pay ” tab

3. Ensure that the balances for Holiday Pay Due and Annual Leave have zero balances. Delete any balance and make a note in the notes area for future reference.

4. Within the employee’s “Other Leave” tab.

5. Ensure that the balance for Alternative Holidays has a zero balance.

6. Within the employee’s “Employment Details” tab enter the employee’s “finish date”

7. The employee will now be shown as an “Ex-Employee” and won’t in future show up when you process pays.

What if they are re-employed down the track?

If they are reemployed you can delete the finish date and enter new anniversary dates for them. Then pay them normally.