A
ACC (Accident Compensation Corporation) – New Zealand’s no-fault personal injury scheme. Employers must pay ACC levies based on their industry classification and liable earnings. The levy rate is reviewed annually and varies by industry risk.
ACC CoverPlus – An optional ACC scheme where businesses pay a fixed annual levy based on historical claims experience rather than liable earnings, providing more predictable costs.
ACC Earner Levy – A levy deducted from employees’ gross earnings (before tax) to fund ACC’s earner account. This is collected through PAYE and passed to ACC via Inland Revenue.
ACC Employer Levy – A levy paid by employers based on their industry classification (LEA – Liable Earnings Amount) and business activities. This is separate from the earner levy and is an employer cost.
Accrued Leave – Leave entitlements that have been earned but not yet taken by an employee. These represent a liability for the employer.
Alternative Holiday – An entitlement under the Holidays Act 2003 given to employees who work on a public holiday that would otherwise be a working day for them. It must be paid at relevant daily pay or average daily pay.
Annual Holidays – A minimum entitlement of four weeks per year after 12 months of continuous employment. Calculated at the higher of ordinary weekly pay or average weekly earnings.
Average Daily Pay (ADP) – The average amount an employee would have received for the relevant period had they worked on that day. Used for calculating certain types of leave payments when ordinary daily pay cannot be determined.
Average Weekly Earnings (AWE) – Gross earnings divided by weeks worked, used to calculate annual holiday pay when it produces a higher result than ordinary weekly pay. Calculated over the 52 weeks before the end of the last pay period before the leave is taken.
B
Base Rate – The ordinary hourly rate of pay excluding allowances, bonuses, and other variable payments. Used in various employment agreement clauses and calculations.
Bereavement Leave – A minimum entitlement of three days for the death of immediate family members, or one day for other specified bereavements. Can be extended by agreement.
C
Casual Employee – An employee engaged on an “as required” basis with no guaranteed hours and no expectation of ongoing employment. Different leave calculation methods may apply.
CEWS (COVID-19 Employment and Wellbeing Support) – Historical wage subsidy scheme (now closed) that provided financial support to employers during COVID-19 lockdowns to help retain employees.
Collective Agreement – An employment agreement negotiated between an employer and a union representing employees. Takes precedence over individual agreements for members.
Continuous Employment – An employment relationship that has continued without significant breaks, used to determine eligibility for various entitlements. Gaps of less than one month generally don’t break continuity.
Compliance Notice – A formal notice issued by a Labour Inspector requiring an employer to remedy breaches of employment law within a specified timeframe.
Current Employee – For Holidays Act purposes, an employee who hasn’t given or received notice of resignation/termination.
D
Day-to-Day Employee – Another term for casual employees who work irregular hours without guaranteed shifts or ongoing employment expectations.
Deduction – An amount withheld from gross pay, either required by law (PAYE, student loan repayments, child support) or authorized by the employee (KiwiSaver, union fees, salary sacrifice arrangements).
Discretionary Payment – A payment that an employer can choose whether or not to make, such as certain bonuses. These may be excluded from gross earnings for holiday pay calculations if they meet specific criteria.
Domestic Violence Leave – An entitlement of 10 days per year (from April 2019) for employees affected by domestic violence, available after six months of continuous employment.
E
Earner Levy – See ACC Earner Levy.
Employee Share Scheme (ESS) – An arrangement where employees acquire shares or options in their employer. Special tax rules apply, and these must be reported through payroll.
Employer Levy – See ACC Employer Levy.
Employment Agreement – A legally required contract between employer and employee setting out terms and conditions of employment, including pay rates, hours, leave entitlements, and duties.
Employment Relations Act 2000 – The primary legislation governing employment relationships in New Zealand, covering good faith obligations, personal grievances, collective bargaining, and union rights.
Equivalent Pay – For KiwiSaver purposes, the gross salary or wages before any KiwiSaver member contributions are deducted. Used to determine ACC levies and tax calculations.
ESCT (Employer Superannuation Contribution Tax) – Tax paid by employers on contributions made to KiwiSaver or other superannuation schemes on behalf of employees. Rates vary based on employee income.
Essential Worker – Classification used during COVID-19 for workers who could continue working during lockdowns. Has specific definitions in health emergency legislation.
Extra Pay – Under the Holidays Act 2003, this includes productivity or incentive payments, overtime, and other variable payments that must be included in gross earnings for leave calculations.
F
Family Violence Leave – See Domestic Violence Leave (the official term since April 2019).
Final Pay – The last payment made to an employee upon termination, including any outstanding wages, accrued leave payments, and final entitlements.
Flexible Working Request – A formal request by an employee to change their working arrangements (hours, days, or location). Employers must consider these requests seriously and can only refuse on specific grounds.
Former Employee – For Holidays Act purposes, an employee who has given or received notice of termination or whose employment has ended.
Fringe Benefit Tax (FBT) – Tax paid by employers on non-cash benefits provided to employees, such as company vehicles, low-interest loans, or subsidized services.
FTE (Full-Time Equivalent) – A measurement of employment expressed as the proportion of full-time hours worked. For example, 0.5 FTE represents half-time employment.
G
Good Faith – A fundamental obligation in New Zealand employment law requiring employers and employees to deal with each other honestly, openly, and with mutual respect.
Gross Earnings – Total earnings before any deductions, used as the basis for calculating holiday pay, KiwiSaver contributions, and various taxes and levies.
Gross Salary or Wages – For tax purposes, the total remuneration before PAYE deductions, including ordinary pay, extra pay, and taxable allowances.
Guaranteed Hours – Minimum hours specified in an employment agreement that an employer must provide and pay for regardless of actual work available.
H
Holidays Act 2003 – The primary legislation governing leave entitlements in New Zealand, covering annual holidays, public holidays, sick leave, bereavement leave, and alternative holidays.
I
Income Equalisation Scheme – A tax deferral scheme for certain industries (mainly farming and fishing) allowing income smoothing. Has specific payroll reporting requirements.
Independent Contractor – A person engaged to provide services who is self-employed rather than an employee. Different tax and legal obligations apply.
Individual Employment Agreement – An employment agreement between an employer and individual employee, as opposed to a collective agreement.
Inland Revenue Department (IRD) – New Zealand’s tax authority responsible for collecting PAYE, student loan repayments, child support, and administering KiwiSaver through payroll.
IR330C – A statement from an independent contractor declaring their contractor status and providing their IRD number, allowing payments without PAYE deductions.
IR348 – A schedule of specified superannuation contribution withholding tax (SSCWT) deductions, filed when employers make employer superannuation contributions.
IR345 – An employer monthly schedule detailing PAYE, earner levy, KiwiSaver, student loan, and child support deductions to be paid to IRD.
IR346 – An employer deductions form filed annually reconciling all PAYE, student loan, KiwiSaver, and other deductions made during the tax year.
J
Jury Service – Time off work for employees called for jury service. Employers must allow time off but are not required to pay (though many do), and employees receive a jury payment from the Ministry of Justice.
K
KiwiSaver – New Zealand’s voluntary work-based savings scheme for retirement. Employees contribute a minimum of 3%, 4%, 6%, 8%, or 10% of gross pay, with employers contributing a minimum 3% (from 1 April 2025).
KiwiSaver Compulsory Employer Contribution (KCEC) – The minimum 3% contribution employers must make to employee KiwiSaver accounts. This is not subject to PAYE but is subject to ESCT.
KiwiSaver Holiday – A period (minimum 3 months to 1 year) where an employee can suspend their KiwiSaver contributions. Must be approved by their KiwiSaver provider.
L
Labour Inspector – An official appointed under the Employment Relations Act with powers to investigate workplace complaints, issue compliance notices, and take enforcement action.
Last Day Worked – The final day an employee actually performs work, which may differ from their final date of employment if they are paid out leave in lieu of working notice.
Leave in Advance – Annual holidays or sick leave granted before the employee has accrued the entitlement, creating a negative leave balance.
Liable Earnings – Earnings subject to ACC employer levy, generally including gross salary/wages up to a maximum threshold (currently capped).
M
Maternity Leave – See Parental Leave.
Median Wage – The middle point of all wages when arranged from lowest to highest. Often used as a benchmark in immigration settings and minimum wage reviews.
Minimum Wage – The legally mandated minimum hourly rate that must be paid to employees. New Zealand has different rates for adults, starting-out workers, and training minimum wages, reviewed annually on 1 April.
MYOB – A popular accounting and payroll software system used extensively in New Zealand for business management and payroll processing.
N
Net Pay – The amount paid to an employee after all deductions (PAYE, ACC earner levy, KiwiSaver, student loan, child support, etc.) have been taken from gross pay.
90-Day Trial Period – A provision allowing employers (with fewer than 20 employees from 2019) to employ new staff on a trial basis where they can dismiss without risk of personal grievance for unjustified dismissal.
NZBN (New Zealand Business Number) – A unique identifier for businesses operating in New Zealand, used for various government interactions including employment relations matters.
NZPPA (New Zealand Payroll Practitioners Association) – The professional body for payroll practitioners in New Zealand, offering certification and professional development.
O
Ordinary Daily Pay (ODP) – The amount an employee would normally receive for working on that particular day, including regular allowances and productivity payments. Used for calculating some leave payments.
Ordinary Weekly Pay (OWP) – The amount an employee normally receives for an ordinary week’s work, including regular allowances and average overtime. Used to calculate annual holiday pay.
Otherwise Working Day (OWD) – A day that would have been a normal working day for an employee but for the fact they are on leave or a public holiday falls on that day.
Overpayment – Wages or salary paid to an employee in excess of their entitlement, which may be recovered by the employer subject to specific legal requirements and limitations.
P
Parental Leave – An entitlement to up to 26 weeks of job-protected leave (from July 2020) for primary carers following the birth or adoption of a child. Includes government-funded Parental Leave Payment for eligible employees.
Parental Leave Payment – A government payment of approximately $754.87 gross per week (2024/25 rate) for up to 26 weeks, paid to eligible employees on primary carer parental leave.
Partner’s/Paternity Leave – An entitlement to up to two weeks of unpaid leave for partners around the time of birth or adoption (extended from one week in 2016).
Pay Period – The regular interval at which employees are paid (weekly, fortnightly, or monthly). This affects how various entitlements and deductions are calculated.
PAYE (Pay As You Earn) – The system for deducting income tax from employees’ wages and salaries and paying it to Inland Revenue on their behalf.
Payday Filing – The requirement (from April 2019) to file employment information with IRD every time employees are paid, rather than monthly.
Payslip – A statement provided to employees showing gross pay, all deductions, and net pay for each pay period. Legally required under the Wages Protection Act 1983.
Penalty Rate – An enhanced rate of pay (such as time-and-a-half or double-time) paid for work outside normal hours, weekends, or public holidays as specified in employment agreements.
Personal Grievance – A formal complaint by an employee alleging unjustified dismissal, disadvantage, discrimination, harassment, or duress. Must be raised within 90 days of the issue arising.
PIE (Portfolio Investment Entity) – A type of investment vehicle with special tax treatment. Employer contributions to PIE-based KiwiSaver schemes are subject to ESCT.
Public Holiday – One of 12 statutory holidays in New Zealand (11 national holidays plus one regional anniversary day). Employees working on public holidays must be paid at least time-and-a-half plus receive an alternative holiday.
Q
Qualifying Week – For parental leave payment purposes, the week used to determine eligibility and payment rate, being the last whole week worked before parental leave begins.
R
Redundancy – The termination of employment because the employer no longer requires the job to be done by anyone. Requires genuine commercial reasons and proper process including consultation.
Relevant Daily Pay (RDP) – A term used in the Holidays Act 2003, effectively synonymous with ordinary daily pay, representing what an employee would normally receive for working that day.
Relevant Tax Code – The tax code applicable to an employee’s earnings, determining the rate of PAYE deducted. Includes codes like M, ME, SB, S, SH, ST, etc.
Restrained Worker – An employee subject to a restraint of trade clause preventing them from working in certain industries or for competitors after leaving employment.
S
Salary – Fixed remuneration typically expressed as an annual amount and paid in regular installments, regardless of hours worked (subject to minimum standards).
Salary Sacrifice – An arrangement where an employee agrees to receive reduced cash salary in exchange for non-cash benefits, often used for additional KiwiSaver contributions or vehicle arrangements.
Secondary Tax – PAYE deducted at higher rates from second or additional jobs, casual work, or schedular payments to avoid under-deduction across multiple income sources.
Sick Leave – A minimum entitlement of 10 days per year (increased from 5 days in July 2021) after six months of continuous employment, for personal illness or injury, or to care for dependents.
Special Tax Code – Tax codes (CAE, EDW, STC, NSW) used for specific payment types like schedular payments, election-day workers, or extra pays.
SSCWT (Specified Superannuation Contribution Withholding Tax) – Tax withheld from employee contributions to certain superannuation schemes (not KiwiSaver). Rates mirror PAYE rates.
Starting-Out Wage – A lower minimum wage rate (80% of adult minimum wage) applicable to 16-17 year olds in their first six months of employment with any employer.
Student Loan – A government loan for tertiary education. Borrowers earning over the repayment threshold must have 12% of gross earnings deducted through PAYE.
T
Tax Code – A code indicating how much PAYE should be deducted from an employee’s pay. Must be provided on an IR330 (Tax code declaration) form.
Tax Code Declaration (IR330) – The form employees complete to advise their employer of their correct tax code.
Termination – The ending of an employment relationship, whether by resignation, dismissal, redundancy, or mutual agreement.
Time-and-a-Half – A penalty rate of 150% of ordinary pay, typically paid for overtime hours or work on public holidays.
Training Wage – A minimum wage rate (80% of adult minimum wage) for employees aged 20+ undertaking recognized industry training involving at least 60 credits per year.
Trial Period – See 90-Day Trial Period.
U
Union Fees – Membership fees for trade unions, which can be deducted from wages with employee authorization and passed to the union by the employer.
V
Vulnerable Workers – Employees who transfer to a new employer as part of a business restructure (such as contracting out of services) and who have specific protections including retention of their employment terms for the first 12 months.
W
Wage – Remuneration typically paid on an hourly or daily basis, calculated based on actual time worked.
Wages Protection Act 1983 – Legislation protecting employees’ wages, requiring payment in money, restricting deductions, and mandating provision of payslips.
Working Day – Any day of the week including Saturday and Sunday, excluding public holidays. Used for calculating notice periods and timeframes under employment law.
Work-related Vehicle – A vehicle provided by an employer for business use, which may have FBT implications if available for private use.
Y
Year of Service – Typically refers to 12 months of continuous employment, used to determine eligibility for various entitlements like annual holidays.
YTD (Year to Date) – The cumulative total of earnings, tax, and other amounts from the beginning of the tax year (1 April) to the current date.
This glossary covers the essential terminology used in New Zealand payroll operations. For specific legal interpretations or complex situations, it’s recommended to consult the relevant legislation, seek advice from employment law specialists, or contact organizations like The Paymasters for expert guidance on payroll compliance matters.