Payroll - The Truth...

Sep 28, 2021

This blog has been guest written by Di Crawford-Errington who just happens to be my cousin, and is also one of the inspirations behind me starting my own bookeeping business many years ago. Di is something of an expert when it comes to NZ payroll so I asked her to write a guest post and she thankfully said yes.

Payroll in New Zealand. It could be simple… really, it could. Unfortunately, payroll being simple is all but a pipe dream as the reality is a whole different story. 

“It’s easy, the software does it all for you..” How often have we heard this sales tactic from software providers? Unfortunately, this not the case, as anyone involved in payroll for a period of time knows.

There are a multitude of factors that make payroll a challenge:

  • New Zealand’s archaic Holidays Act which was initially written in a day and age when employment and work schedules looked far different from what they do today.
  • the payroll technology used and the application of the Holidays Act
  • employment agreements and the lack of information they contain, or various unworkable points often included in them. Or sometimes the lack of any agreement at all.
  • The fact that many payroll decisions are made by people who have little or no understanding of payroll, unfortunately creating more issues for payroll practitioners.

Payroll needs to be efficient and well managed, just like any other area of a business. If it isn’t, it can undermine one of the largest costs to a business and put the business financially at risk.

A well-managed payroll is one with clearly defined systems and processes that can be evaluated and audited. 

There is a big difference between punching some numbers into a payroll system, and understanding, checking, evaluating and recording the calculations behind the numbers. 

Payroll as a service

Bookkeepers are well-placed to provide payroll as a service to support businesses to get it right. We are generally analytical types and used to operating within the financial sphere of business. We are also pretty good at interpreting and operating within the confines of the law.

If you, as a bookkeeper, choose to go down this route, I strongly encourage that you ensure you receive ongoing training to stay informed of all the changes in legislation - which are coming thick and fast in NZ - and have a support network to call on for those challenging situations our clients get themselves into with payroll.

#youdontknowwhatyoudontknow, right?

Build Relationships

Building a working relationship with an HR professional is a must. Payroll and HR are two very different roles and require different sets of expertise.

Herein can lie a disconnect between payroll, and those employing staff and making payroll decisions without knowing what is actually achievable within the payroll software.

The payroll practitioner or bookkeeper is then left to figure out how to make it all work within the confines of the software.

Working together and building a trusting relationship will benefit both parties.

Payroll is a Profession

Payroll Professionals combine the unique skill set of elements of accountancy, employment relations, IT savvy and general and specialist human resource knowledge. It’s certainly not for the faint hearted, but it can be so rewarding.

I highly recommend if you are providing payroll as a service that you join a national organisation or association who has a voice for payroll in your country.

The NZ Payroll Practitioners Association was formed in 2007 and is the leading national organisation advocating for payroll in NZ. They provide certification for Payroll Practitioners as well as learning opportunities via webinars, conferences, newsletters, and technical support.

Knowledge is paramount and an Association such as NZPPA has certainly been a valuable resource on my payroll journey over the last few years.

We hear comments like this all the time:

“The payroll system calculates it all for me”  - There are many processes when it comes to payroll, some automatic, some manual. No system can run a payroll fully automatically because payroll covers aspects of finance, law and IT.

“Data entry is all payroll people do” – Data entry is a big task for payroll when Time and Attendance software is not used. Understanding what and why is far more than just data entry’.

“Payroll can process a pay anytime” – Due to being deadline driven, payments cannot be made anytime. There is a cost to payroll every time a payment is made, either to an external payroll provider or the internal payroll processing taking time away from other tasks.

“Running a payroll is not rocket science” – Understanding the system, legislation, and terms and conditions of employment when setting it up and paying employees is a complex task.

An accurate understanding is essential

New Zealand’s payroll legislation is one of the most complicated in the world. To understand the calculation of wages, allowances, payroll taxes and processing of the payroll, is essential to running payroll correctly.

Having seen many payroll disasters caused by lack of knowledge over the years, and understanding the need for further upskilling opportunities for those doing, or wanting to do, payroll, Di has developed an eight-week workshop series to meet this need.

Information about, and registration for, the Payroll Essentials for Professionals workshop series can be found on at Ontrack Bookkeeping's website.


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