Christchurch Payroll Professionals merges with Ezypay

Christchurch payroll bureau, Payroll Professionals Limited, has decided to merge with Ezypay.

The owner, Sue Culham, was finding it too difficult to maintain her client base on her own, plus the increased costs of payroll software was making it uneconomic.

All clients will be seamlessly merged with Ezypays over the coming weeks.

Employer breach not serious enough for Constructive Dismissal

Ms Sydow claimed she was constructively dismissed by Employment Recruiters International (ERI). Ms Sydow sought reimbursement for 15 months lost wages and $40,000 compensation.

ERI director Mr Le Noel had offered Ms Sydow permanent employment with the company on 14 November 2008. The offer was made with the express requirement that Ms Sydow acquire a work permit. Ms Sydow claimed under this offer that her remuneration was set at $55,000 per annum as a base salary.

In her immigration application she stated her salary as $55,000. The letter of offer was never signed or returned by Ms Sydow, however the Authority held that Ms Sydow intended working at ERI on those terms. Ms Sydow was granted a work permit some months later and began working for ERI on 19 January 2009.

Within days of beginning employment Mr Le Noel presented Ms Sydow with a written employment agreement dated 18 January 2009. The remuneration clause in this agreement expressly stated she was to be remunerated by commission only.

On reading the agreement, Ms Sydow was opposed to its terms, especially the commission only clause. Ms Sydow did not raise her concerns with Mr Le Noel although she did approach Mr Lobo, another director of the company who she believed was more approachable.

The Authority accepted Mr Lobo supported the commission only term and that he did not raise Ms Sydow’s concern with Mr Le Noel. Mr Lobo advised Ms Sydow to find a solution to her problems without making an issue out of the commission only structure.

In August Ms Sydow appointed Mr Appleby as her representative. After meeting Mr Le Noel, Mr Appleby stated by letter that he believed the parties had agreed to amend Ms Sydow’s employment agreement to reflect the November 2008 offer and that salary arrears would be paid to Ms Sydow.

Mr Le Noel did not accept Mr Appleby’s understanding of the meeting and contended that the applicable agreement was the January agreement. Mr Le Noel wrote to Mr Appleby stating that when Ms Sydow actually began working in January, she had accepted ERI could no longer afford to pay her a base salary.

Ms Sydow was then given an employment agreement reflecting what ERI could afford within 2 days of commencing employment. Mr Le Noel stated Ms Sydow could temporarily operate as the company’s research manager so that her permanent residency application could be supported but that in the future she would be employed under the January agreement.

Mr Le Noel also stated Ms Sydow could terminate her employment if the arrangement was unacceptable to her. Mr Le Noel again wrote to Mr Appleby in September stating that Ms Sydow had not signed and returned her employment agreement. The letter stated that ERI had assumed she had accepted the terms of the January agreement as Ms Sydow continued to work for ERI and accept remuneration since beginning employment. The letter ended in asking Ms Sydow to sign and return her employment agreement for formal confirmation as previously requested.

Ms Sydow responded by resigning immediately raising a personal grievance for constructive dismissal. It was accepted that Ms Sydow’s remuneration was changed due to the precarious financial position of ERI, but that this could not justify a breach of contract. The Authority did not consider this case to be one where an employer gave an employee and ultimatum of resigning or being dismissed.

The Authority also felt there was no conduct by ERI that was intended to force Ms Sydow’s resignation. The Authority then looked at whether the beach of Ms Sydow’s employment agreement was serious enough that her resignation was foreseeable.

The Authority accepted that objectively, Mr Le Noel could not have reasonably foreseen Ms Sydow’s departure as a result of her dissatisfaction with her employment terms. The subsequent conduct of the parties was carefully considered by the Authority and held to be of critical importance.

In the 5 months of Ms Sydow’s employment she never gave Mr Le Noel the impression she was unhappy. The Authority held this initial objection was slight. Furthermore Ms Sydow had then worked approximately 5 months on without protest.

The Authority found Ms Sydow’s conduct affirmed the breach of contract. The Authority held that although unhappy, Ms Sydow resigned freely and a claim for constructive dismissal must fail. The Authority accepted ERI had essentially unilaterally varied the terms of the November offer. This was held to be a serious breach of Ms Sydow’s employment agreement. It was noted that if Ms Sydow had applied for a compliance order under s 137 of the Employment Relations Act 2000 she may well have been successful in getting ERI to comply with the November offer.

Sydow v Executive recruiters International Limited and Anor [AA 229/10; 17/05/2010; A Dumbleton]

Authority finds Pay Reduction to be by Agreement

Mr Balashov alleged that Libor Limited (“Libor”) did not pay him according to his employment agreement and instead, substituted a new employment agreement with lower rates of pay.

Mr Balashov said he never agreed to the subsequent employment agreement. Libor said that the business fell upon hard times and they were forced to obtain the consent of all their employees including Mr Balashov to take a 10% pay cut.

Libor said that employees were presented with the option of either accepting a pay cut or terminating employment and only one employee terminated their employment, all the others, including Mr Balashov, accepted the arrangement.

Libor pointed to the fact that Mr Balashov was paid the lower rate from 9 May 2009 until he terminated his employment on 18 November 2009 and they alleged his personal grievance was out of time having been raised more than 90 days after the pay reduction.

The Authority considered whether Mr Balashov raised the personal grievance within time, whether he agreed to the pay reduction and whether he was treated fairly.  The Authority was satisfied on the evidence that Mr Balashov did not raise his personal grievance within time and that that he did in fact agree to the wage reduction.

The Authority accepted Libor’s evidence that the only occasion on which Mr Balashov raised his objection was in his personal grievance letter received on 4 November. The Authority was satisfied Mr Balashov was treated fairly and in particular was treated in exactly the same way as other workers in the same position. The agreement was not a unilateral and therefore an illegal change, but a bilateral and therefore perfectly proper one. Mr Balashov’s claim was dismissed.

Balashov v Libor Limited [CA 113/10; 10/05/2010; J Crichton]

Interim Reinstatement Declined for Nurse who had Friendship with Patient

The applicant referred to as A was employed by The Canterbury District Health Board (the Board) as a registered nurse working in the mental health service.

A had 27 year service with the Board and it’s predecessors. In January 2010 the Board was advised that a patient had disclosed her

friendship with A to another staff member.   The friendship involved texting with the patient, having coffee together and going to the movies.

The Board subsequently conducted an extensive investigation and in oral and written submissions, A admitted to having accessed the patients clinical notes and lending her money. The Board summarily dismissed A on in February 2010 on the basis of having a personal relationship with a patient and accessing her medical records which constituted serious misconduct.

Promptly after the dismissal, A lodged an application for reinstatement. The Authority questioned the application on four grounds. Does A have an arguable case; would damages be an alternative remedy; where does the balance of convenience lie; and what is the overall justice of the case? On the first ground the Authority were satisfied that this presented an arguable case in regards to A’s concern about the procedure carried out by the Board. The Authority noted that the test for an arguable case in this context is relatively low. The Authority considered the balance of convenience and weighed the relative hardship to the Board if A was successful in this claim versus the hardship suffered by A being away from employment pending resolution of his personal grievance. The Board argued that due to the fact that A admitted serious breaches of his professional obligations, the Board was entitled to conclude it no longer had trust and confidence in A. The Board further added that the patient involved with A was seriously unwell and that A’s behaviour contributed to this. A’s breach to his professional boundaries had a damaging effect on the patient. The Board contended even if A were to be reinstated to another part of the facility the real issue would be the ongoing health and well being of the patient in establishing her trust with the Board and after what has happened, A’s reinstatement could impact negatively on the patient. The Board further added where reinstatement was possible, they could not prohibit A from the Board’s computer system hence would not be able to guarantee A would not be able to access individual patient files. A submitted that he wished to maintain his skills as a nurse and wished to be given an opportunity to prove he was trustworthy. A’s main argument was that he was suffering stress when he committed the breaches. A however accepted that the primary motivator for reinstatement was financial hardship due to the dismissal. On these fundamental points the Authority ultimately concluded that the balance of convenience favoured the Board because they did not consider permanent reinstatement to be a likely remedial outcome if the personal grievance was successful. The Authority also noted that A’s claim for undergoing stress did not justify his professional breaches especially when the Board has support structures to assist staff during stress. The Authority further added that in considering the overall justice of the case, the breaches by A against the professional code of nursing and professional ethics in the context of a specialised career makes reinstatement hard to contemplate. The application was declined.

A v The Canterbury District Health Board [CA 40/10; 26/02/2010; C Crichton]

Results of our Survey should concern MYOB

Well the results are in and they don’t paint a very good picture for MYOB.

There was not a huge response which I don’t think was a lack of interest in the topic, more the limited exposure our blogsite receives at the moment.

Had we been able to e-mail all MYOB clients (the way they did) about the survey then I’m sure we would have had a much larger sample size.

Anyway, you can view the results HERE.  The password for the report is nzpaymasters

To view the answers click on Next on the top right corner.

ACC Earners’ Levy – Why is it so Hard?

For the past few months now we have been investigating how ACC Earner Levy is calculated and reported by all the main payroll software providers and I must say it has totally baffled me.

ACC Earner’s Levy is the ACC component paid by the employee to cover non-work related accidents.  That bit is simple.

The amount payable by each employee is capped and based on both a percentage calculation and a gross income threshold.  For example, the current rate of Earner Levy is 2% for the 10/11 tax year capped on gross income of $110,018.  This equates to a maximum individual levy of $2,200.36.

The figures for the 09/10 tax year were a calculation of 1.7% capped on a gross income of $106,473 or a maximum individual levy of $1,810.04.

A simple enough calculation you might think, you just calculate the EL on every dollar earner until you reach the maximum payable!  But alas, that is not how its calculated and what happens if you are working for more than one employer, how can they know when you have reached your EL cap?

The way ACC Earners’ Levy (EL) seems to be calculated by the various Payroll Software companies is (1) work out the gross liable earnings, then (b) multiply it by 2% and add that to the total PAYE deduction.  This is how it seems to be done by a couple of very popular payroll packages, but its a flawed logic because it does not take into account the fact that there is a cap on the amount you have to pay.

What should be happening, and this will vary on your pay frequency, is that every pay a figure is calculated taking into account the maximum EL an individual has to pay.

Maybe an example will better show this.

For our example, John earns $3,000 a week, high I know but if you do not earn more than $2,115.73 ($110,018 / 52 weeks) then the calculation will always be a straight 2% of Gross.  He also gets the occasional bonus and sales commissions.  I’m going to ignore all Tax Calculations for our examples.

Straight Salary – the same amount every week

How many payrolls seem to calculate the EL is Gross $3,000 x 2% = $60, but what should be happening is:

A Gross of $3,000 is greater than the weekly maximum of $2,115.73 therefore the Earner Levy will be $2115.73 x 2% or $42.31.

So assuming John gets paid the exact same each week his total Earner Levy will be $42.31 x 52 or $2,200.36, bingo, all is good.

But have a look at what your payroll is calculating! In most cases it is going to be $60 and if so by the end of the year you have paid $3,120 in Earner Levy or $919.64 too much!

Salary plus Extra Pays

It seems a strange situation but the current legislations states that the Earner Levy cap is not to be applied to Extra Pays.  So lets assume that in the above example, four times a year, John received a bonus of $2,500.

As Extra Pays are not factored into the EL cap, the calculation is very straight forward:

$10,000 ($2,500 x 4) x 2% or $200 so if the EL cap is not taken into account, John will end up paying a total of $3,320 ($3,120 + $200) or $1,119.64 too much, remember the maximum payable each year is $2,200.36.

So I would like to ask the various Payroll Software vendors out there the following:

1. Do you apply the EL cap in your PAYE calculations?

2. Do you show the EL calculations on any report so the figures can be verified?

3. How do you report the calculated EL figure to the ACC Department?

We have requested information from the IRD surrounding how they account for Earners’ Levy as essentially they are only collecting it on behalf of the ACC Department, much like Kiwisaver.

We will continue on this theme as we try and find out, What happens to any overpayments of Earners’ Levy?

Complete our MYOB Survey – One Week to Go

If you have not yet completed our MYOB Survey looking at their Annual Maintenance and Support costs then you still have a week to go.

We will publish here the full results so you can see what MYOB Users are saying.

WageEasy is coming to New Zealand

The Australian developed Payroll/HRIS product called WageEasy is coming to New Zealand.  The WageEasy program is a full HRIS system in that it handles everything to do with employee management, not just payroll or HR etc.

The product includes three main modules, Award Interpretation, Payroll and Human Resources.  Some details from their website below.

Payroll System Limited is co-ordinating a presentation by Peter Fanning from Wage Easy in Christchurch.  The date has not been confirmed yet but it will be between July 28th and 30th.  If you are interested in having a look at WageEasy then please e-mail justin@paye4u.co.nz and he will be in touch.

View their website HERE!