Employer KiwiSaver contribution cannot take employee below minimum wage

Court of Appeal confirms the Employment Court’s position Employers can agree with employees that they will pay KiwiSaver contributions on a “total remuneration” approach whereby their wages are inclusive of the employer’s contribution. However, there is an important exception to that rule, and that is when the gross wages after such contributions are made are less that the statutory minimum wage. The Employment Court’s stance was... Read More

Employer’s KiwiSaver contributions could not be deducted from minimum wage

The Court of Appeal has dismissed an appeal from an aged care provider that sought to deduct KiwiSaver compulsory employer contributions from the minimum wages it paid its caregivers. The Employment Court had found that it could not do so (Faitala v TerraNova Homes & Care Ltd (2012) 10 NZELC; [2012] NZEmpC 199) and its reasoning has now been endorsed by the Court of Appeal. The Court of Appeal agreed that the opening words of section 6 of the... Read More

KiwiSaver and total remuneration approach to employer contributions

With the recent increase in the minimum rate of KiwiSaver contributions rising to 3% for both employees and employers, it is timely to examine the implications of KiwiSaver from both a financial and legal perspective. Many employers are opting for the total remuneration approach to KiwiSaver in order to minimise the ever increasing costs of the scheme. This approach involves paying all employees the same total remuneration regardless of KiwiSaver... Read More

KiwiSaver employer contributions

With the recent increase in the minimum rate of KiwiSaver contributions rising to 3% for both employees and employers, it is timely to examine the implications of KiwiSaver from both a financial and legal perspective. For employers, there are two approaches to calculating minimum employer contributions to KiwiSaver: the “default” approach and the “total remuneration” approach. The default approach occurs when an employee, who is a member of... Read More

Checklist for 1 April 2013 Payroll Changes

The IRD have put out a checklist to remind employers of the important payroll changes which take effect 1 April this year.  To view this checklist please click here. Just a reminder, the key changes are: The minimum KiwiSaver contributions increase from 2% to 3% The minimum Student Loan repayments increase from 10% to 12% The ML and MSL can no longer be used Tax credits for children have been repealed The minimum wage increases from $13.50 to... Read More

Important Payroll Changes 1 April 2013

For the pay period beginning 1 April 2013 or after, there are some important payroll changes employers need to be aware of. These changes are summarised below: The minimum KiwiSaver contribution (employee and employer) increases from 2% to 3%. Minimum Student Loan repayments increase from 10% to 12% for earnings over and above the repayment threshold (currently $19,084). ML and MSL tax codes are no longer to be used.  These should be changed to... Read More

Recent Case: Remedy for failure to pay KiwiSaver contributions

Compensation for the loss of the benefit of an employer’s contribution to an employee’s KiwiSaver account can be claimed but the Employment Relations Authority does not have jurisdiction to order an employer to make KiwiSaver contributions to an employee’s fund. That being the case, when an employer fails to make the required KiwiSaver contribution, employees should bring a personal grievance against the employer and claim a remedy for loss... Read More

Employers’ KiwiSaver contributions must be paid in addition to minimum wage

Faitala v Terranova Homes & Care Ltd A full court of the Employment Court has held that the employer of any employee on the minimum wage must pay the KiwiSaver employer contribution in addition to the minimum wage or, if the parties agree to what is commonly called a “total remuneration” approach, the gross wage must amount to the minimum wage plus 2%. In other words, if the employee is left with a gross wage of less than $13.50 per hour... Read More

KiwiSaver: does total remuneration approach fit with minimum wage?

Can an employee’s remuneration be inclusive of the employer’s KiwiSaver compulsory employer contribution in circumstances in which the gross wage is the statutory minimum? This question, removed by the Employment Relations Authority to the Employment Court as an important question of law, was raised by caregivers at a rest home who were paid the statutory minimum wage. Their employment agreements stated that their remuneration was inclusive... Read More

KiwiSaver Seniors can withdraw savings

KiwiSaver reaches a milestone this month.  From 1 July 2012 the first group of KiwiSaver members will be eligible to withdraw their savings. This applies to members who qualify for NZ Super (currently aged 65 or over) or who joined KiwiSaver between ages 60 and 65 and have been in KiwiSaver for five years. If this criteria pertains to you, and you require guidance on what to do, contact your scheme provider directly if you haven’t already received... Read More

Changes to KiwiSaver ESTC

From 1 April 2012 employers will need to calculate ESCT at a rate equivalent to each individual employee’s ESCT rate, or marginal tax rate (if the employee/employer agree to this method), as the option to apply ESCT at a standard rate has ceased.   In most cases, the ESCT amount is deducted from the amount to be paid to the employees’ KiwiSaver accounts, rather than being an extra cost to employers.

There are two ways of taxing the employer... Read More

KiwiSaver changes 1 April 2012 and beyond

In the 2011 Budget, Government announced changes to KiwiSaver. The planned changes to KiwiSaver for the 2012 income year include: The member tax credit (MTC) is to be halved for the next MTC year (ending 30 June 2012). Government will now contribute 50c for each $1 contributed by individual KiwiSaver members, to a maximum of $521.43 a year. ESCT (employer superannuation contribution tax) will apply to all employers’ cash contributions to employees’... Read More

October 2011 Newsletter

This newsletter provides a brief overview of the rules around bonus payments under the Holidays Act 2003 and should increase your awareness of the need for careful wording when including in  your employment agreement. Also included is the Government’s proposed plans regarding KiwiSaver auto-enrolments taking effect in 2014/2015, subject to the Government returning to budget surplus. We also outline the potential cost to employers of unlawful... Read More

Newsletter October 2011

Bonus payments under the Holidays Act 2003 There is confusion over whether employers should be including bonus payments in the calculation of holiday pay, as has been highlighted by a recent Employment Relations Authority determination. Recruitment firm, Adecco, is facing a $17,000 back pay determination from the Authority for bonus payments to ex CEO, Fleur Board, and potential claims from employees who had a bonus payment included in their remuneration... Read More