Why Payroll Matters

If you don’t get payroll right, the consequences can be costly – think prosecution, fines, legal fees, disgruntled employees, and a huge amount of time – not to mention the impact on your reputation.

The Ministry for Business, Innovation and Employment (MBIE) won’t accept ignorance as an excuse for paying staff incorrectly, even if it is a genuine mistake.On top of this, in the 2018 budget MBIE was granted $8.8 million to invest in enforcing compliance, and it’s looking like the number of Labour Inspectors will double by 2020.

It’s also easy for your employees to make a complaint if they think they’re being paid incorrectly. A quick online search will lead them to MBIE’s website where they can report their concerns.

MBIE’s payroll auditing can be random, and you never know when Labour Inspectors may come knocking on the door – so now’s the time to sort it out with Payroll Matters.

Here are just a few examples of high-profile business that haven’t complied and consequently paid the price.

Not paying employees for pre-work meetings

The penalties:

  • Must comply with the MBIE improvement notice and fix practices
  • Paying employees arrears

Excerpt from MBIE’s ruling: “If the activity is integral to the employees’ role, and there is expectation to attend – this is work, and employees should be paid for it.We encourage any other employers who currently are failing to pay their employees for such activities… to fix these practices, as following this decision, they cannot continue to plead ignorance.”

Failing to provide employees with correct employment agreements, and failing to keep correct wage, time, holiday and leave records

The penalties:

  • $32,400 fine
  • $54,000 paid to staff in arrears

Excerpt from MBIE’s ruling: “It is disappointing to see companies operating under established brands failing to provide staff with their minimum rights.”

Failing to give staff a lieu day after working on a public holiday

The penalty: ordered to give alternative holidays (or the equivalent pay) accrued by all past and present employees. This is estimated to cost$1.6 million.

Excerpt from MBIE’s ruling: “Employers who configure their payroll system in a way that is convenient to themselves without proper regard to their obligations run a high risk of being non-compliant. While these considerations may require additional effort for some businesses, this is the law and they must abide by it”.

© Payroll Matters 2020