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New Zealand Payroll the first 90 days


It’s been just under three months since we launched New Zealand Payroll in Xero. We wanted to share with you what’s happened over the past few months and what’s coming in the short term.

When we launched, a few key expected features were not quite complete, including the pay run payments report and the monthly filing reports. These didn’t stop employees being paid or taxes being filed and paid. They have now been released, along with fixes for a few teething issues.

Here’s what we released over the past few months in New Zealand payroll:

  • EDF, EMS and KED files for uploading to ir-File and submitting to Inland Revenue
  • Request a call back from Xero Support option when you’re setting up Payroll
  • View all payslips for each employee without going from pay run to pay run
  • KiwiBank, Westpac, ASB and BNZ payment files
  • Pay run payments report
  • Report showing all details included in the EDF, EMS and KED files
  • Automatically assigning annual leave to new employees
  • Allowing negative leave requests to be submitted
  • Calendar to show dates including employee birthdays, leave requests and payment dates
  • Ability to record the total paid as at the opening balances date for any leave in advance taken

We move pretty quickly at Xero and for Payroll we release updates every two weeks. You’ll see constant improvements and features all designed to make Payroll more powerful. And we have a list of updates coming soon including:

  • Automated final pay calculations
  • Employee files to store contract or other documents against each employee
  • Emergency contact details and associated report
  • Allowing employees to edit their own address and information from the employee app
  • ‘Xero Me’ iOS and Android mobile app for employees
  • Showing annual leave available to be taken in advance
  • Additional Relevant Daily Pay calculation options
  • Additional Reports (starting with Leave reports)
  • Ability to override default tax calculations for lump sums and final pays

Long term we are working on a number of larger projects to improve the payroll experience in New Zealand, including seamless payments direct to your online banking and powerful web and mobile timesheets.

No matter how good a payroll system is, if it is not set up correctly, it will not perform optimally and result in unnecessary issues down the track. Here are some of the common things we have noticed when we’ve been contacted for assistance:

  • Setting a maximum to accrue for Annual Leave. Legally there cannot be a maximum. We will be removing this field for Annual Leave to prevent a maximum being entered.
  • Setting a schedule of accrual for Annual Leave other than On Anniversary Date. To be compliant it must be On Anniversary Date, so we will be locking the ability to change it.
  • Setting a maximum to accrue for Sick Leave that is less than the equivalent of 20 days. The maximum legally must be at least 4 times the annual entitlement.
  • Creating earnings types as Regular Earnings rather than Other Gross Earnings. Regular Earnings are for those that are used as the employee’s base salary & wages, based on hours. Additional Regular Earnings pay items only need to be created if the employees’ base earnings need to be coded to multiple ledger accounts. Where possible we recommend using tracking rather than multiple Regular Earnings pay items. Other Gross Earnings allows pay items to be created that are not based on hours, are a multiple of the employee’s base earnings (e.g. time and a half) or a fixed amount.
  • Not entering Opening Balances for employees who started prior to the Opening Balances Date. The previous 12 months opening balances or pay history is required to ensure that annual leave rates are calculated correctly. Also so that Holiday Pay is reset correctly on the Annual Leave anniversary date. These can be entered or corrected at any time, but ideally should be set up correctly prior to staff taking annual leave, and prior to any anniversary dates.