Check Your Pay Slips!

Richard AshbyPartner, Gilligan Sheppard

Pay slips are an important component of any payroll services. Also known as wage slips, paystubs or pay advice. 

Before the birth of the internet, emails, and the old wire transfer systems, pay slips were often provided to employees in a paper form along with their pay cheque. The pay slip was an acknowledgement of the value of an employee’s time to their employer. (I still remember receiving my first ‘paper’ pay slip from my first ever job). Soon enough, our ‘paper’ pay slips were phased out for an electronic delivery, and a greater emphasis has been placed on the importance of the information included in our pay slips, not only because of legislative changes, but also employee awareness around their rights to access payroll information.

Since going digital, there has been an (unfortunate) increase in taxes, however, pay slips are far more detailed than before. It is easy to gaze over the numbers and focus entirely on what hits the bank, but it is important to keep track of and understand the additional information (for both employers and employees).

Along with covering your salary / wages, pay slips (should) also explain where ‘leave’ balances are sitting, and the value of any holiday or other leave paid during the relevant pay period.

This is a focus of many questions/issues from employees, payroll administrators, and employers. 

So, what information should usually be contained in your pay slip?

  • Name of employee, address and IRD number.
  • The pay period of which the pay slip relates to
  • Bank account number
  • Remuneration rates based on an hourly wage / salary rate
  • Tax code and amount of taxes paid to the government
  • Kiwi Saver contribution rates if applicable
  • Leave take, whether it be in the form of annual leave, sick leave, public holiday, bereavement leave or some other discretionary leave

Interestingly enough, did you know that employers do not have to provide you with a pay slips unless it is specifically stated in the employment agreement? If an employee is not provided with a pay slip, or if they require further information on details of their pay, employees can request (usually in writing) to be provided with a copy of their wages, time, holiday and leave records. Employers need to ensure that these payroll related record books are up to date and correct. Failing to record the relevant information, or failure to provide it to employees upon their request, can have a large financial impact for employers. For further information on what is included in these records, see here.

It’s important to make sure your payroll providers are calculating these amounts in accordance with the legislation, and don’t be afraid to ask questions and seek advice if in doubt. For employees – check your pay slips – there may be issues / errors that are completely unintentional – but they can add up over time. 

The theme of reliance on employers to correctly monitor and process payrolls correctly, has been tested in recent times. With cases of employees being found to be underpaid because of incorrect calculations of different leave types. The Holidays Act and holiday pay issues are, in reality, a minefield – even MBIE (the government agency responsible for enforcing compliance) got its calculations wrong in the past year. Fixing errors (liability can generally go back six years) can be a painful and expensive exercise. More recently, employees for the Rotorua Council were found to have underpaid 1140 former and current staff to the tune of $1million dollars.

So, the moral of the story here is – do not put your head in the sand when it comes to payroll, pay slips, and records. Getting it right makes all the difference – if an employee challenges their pay, or the Labour Inspector comes knocking on your door to run audits!