Getting it right from day one: Payroll Success Starts with how you begin

Setting up a new employee isn’t just payroll—it’s about compliance, and setting your team up for success. Nail the essentials to reduce risks and build a strong, thriving workforce.

Step 1: Employment Agreements

Every employee in New Zealand must have a written employment agreement which should outline the terms of employment, including job description, salary or wage details, working hours, and leave entitlements. Make sure both parties understand and sign the agreement before the employee starts. It’s advisable to seek legal advice or use a reputable templatethat meets NZ standards to cover all bases.

Did You Know?

Employers are legally obligated to provide an employment agreement, even for casual and fixed-term employees.

Step 2: Tax and IRD Registration

Next, you’ll need to register your new employee with the Inland Revenue Department (IRD). New employees need to fill out an IR330 form, choosing the relevant tax code. Ensuring the correct tax code helps avoid issues with over or under-taxing, preventing tax bills for your employees at the end of the year.

Step 3: KiwiSaver Enrolment

KiwiSaveris an essential part of New Zealand’s workplace benefits system. Employees are automatically enrolled in KiwiSaver if they are between 18 and 64 years old, with the option to opt out. As an employer, you're required to contribute at least 3% of an employee's gross earnings to their Kiwisaver - if they are enrolled. You're also responsible for deducting their personal contribution and passing this onto IRD. 

Step 4: Adding Employees to the Payroll Process

Integrating a new employee into your payroll process is crucial for smooth operations. Using a payroll service like Thankyou Payrollsimplifies this step by automating PAYE calculations, managing leave, tracking employment anniversary dates, and ensuring accurate data entry from the start. Getting these details right from the get-go will save you time and hassle down the line, leaving you free to focus on growing your business.
 

Pro Tip: Save time and reduce stress by using a PAYE intermediary who handles payments to IRD, payments to employees and ensures your legal filing obligations are completed—it’s a smart move for busy small business owners.

Step 5: Accurate Record-Keeping

New Zealand law mandates that employers keep accurate employment and payroll records. These records protect both you and your employee, ensuring transparency and enable you to stay compliant with labour laws. Using a cloud-based payroll system can simplify this process and keep your records up-to-date automatically.

Need to Know: Employment records must be kept for at least seven years, even after the employee has left.

Set yourself up for compliance and business success

While compliance is essential, clear communication and good faith are just as important. By fostering open dialogue, accurately completing paperwork, and ensuring your employees are paid correctly and on time, you create a positive onboarding experience that builds trust from day one. This foundation sets the stage for a strong, productive working relationship and a more engaged team.

For further assistance on setting up employees and managing payroll in New Zealand, visit Thankyou Payroll.