Filling employment gaps over summer

With the holidays coming up, you may have started to think about employing some extra people over the holidays. If you do, think carefully about the kind of help you need and what kind of employment contract is best suited to the situation. It's important to make sure you comply with current employment law and have it right from the start.

Casuals

Casual employees might be right for your business, for instance if you are covering unexpected absences. But remember that if you treat casual staff as if they are permanent - for instance, give them regular hours or work over a sustained period - their employment may be regarded as permanent, with all that that entails. Points to note:

  • Casual work is intermittent or irregular, and casual employees don't have to accept every offer of work you extend
  • Just like other employees, casual employees need an employment agreement

Fixed-term employees

It may be suitable to employ someone on a fixed-term agreement, particularly if working hours are regular and predictable. The law is strict about the form of such agreements, and if that is not complied with, you may find yourself with a permanent employee, i.e. someone whose agreement is of indefinite duration.

A fixed-term agreement is intended to be for a limited time, therefore the agreement must state the means of ending the employment relationship. This could be a specific date or event (like the last day of the Boxing Day Sales or the final performance of the Christmas pantomime). Or when a specific project is completed, for instance roofing the new hay barn or installing a new cooling system.

As an employer you must have genuine reasons for the employment period to be fixed-term and you must advise your prospective employee of why, when and how the employment will end. Make sure the employment agreement backs this up clearly.

Holiday pay

Be aware of the rules around entitlement to holiday pay. Both casual employees and employees on a fixed-term agreement of less than one year can agree to receiving 8% added to their gross weekly earnings (paid-as-you-earn) instead of taking annual holidays or getting paid out all of the 8% at the end of their term. You need to discuss this option with the employee and, if they agree, it must be stated clearly in the employment agreement and shown as a separate item in the employee's pay slip and in wage records at a rate of at least 8%.

Seasonal workers

Many businesses are looking for seasonal workers. The hospitality industry want people for their high season. The summerfruit and wine sectors are moving into high gear.

If you are keen to employ seasonal workers over the summer and can't find New Zealand citizens or residents to do the job, it could be an option to employ overseas workers. If you are considering this, make sure you take these simple steps:

  • When advertising, state that applicants must be entitled to work here
  • When applicants contact you, ask for evidence they are entitled to work here
  • Keep this evidence on file
  • Check their visa and passport details on Immigration NZ's online tool VisaView

And remember – like other workers, seasonal workers have rights as employees and are able to seek protection from workplace bullying or exploitation. Make sure you observe their entitlements to holiday pay and breaks, that you pay them at least minimum wage and have written employment agreements with them.

If you would like us to assist you with your unique employment requirements please contact our office.

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Ho Ho Knowing what's deductible

Do your plans for the festive season include functions to celebrate with clients and the team? What about gifts? If they do, here are some tips on the tax implications.

Some entertainment expenses are fully deductible but some are not. Use these examples as a guide:

50% deductible
Christmas drinks for team members or clients in the office
Christmas drinks for team members or clients in the pub
Hire of a launch to entertain clients
Restaurants providing food and drinks to team members at a social function in their restaurant
Staff Christmas party on or off the business premises
Function hosted in a marquee at the races (or in a corporate box at the rugby). Includes the cost of tickets and any food and drink provided
A weekend away for the team at holiday accommodation in New Zealand. Includes any food and drink provided
100% deductible
Donating food to a Christmas party in a children's hospital
Providing morning and afternoon tea for your team
Providing entertainment, including food and drink at your promotional stand for the Cracker Christmas Festival
Holding the Christmas party in Fiji (woo-hoo!)
0% deductible
Taking your family (who don't work with you in your business) out for dinner to thank them for being patient while you worked long hours and paying for this using the business credit card

 

Gifts to clients

If your Christmas giving includes gifts to clients, remember that some gifts will be fully deductible while others will be only 50% deductible.

Use these examples as a guide:

50% deductible 100% deductible
Bottle of wine or six pack of beer Calendar
Meal voucher Book or gift voucher
Basket of gourmet food Tickets to a rugby game (but not corporate box entertaining)
Box of chocolates/biscuits Movie tickets
Christmas ham Presents (not food or drink)

 

FBT on gifts and entertainment

If you are giving gifts to your team you may also be liable for fringe benefits tax. There's a $300 exemption from paying FBT per employee per quarter so if the value of the gift is less than $300 you may be exempt. However, if the value of total benefits for an employee goes over $300 for the quarter year (and provided the total value of all benefits doesn't exceed $22,500 for the year), the full value of the benefits is subject to FBT.

There are exceptions to this that make it a tricky area so if you'd like more information on a whether a specific event you're hosting is 50% deductible but may also be liable for FBT, please contact us.

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Timely Reminders

These dates apply to clients for whom we prepare tax returns. If we do not prepare your returns different dates will apply. Please contact us if you would like more information.

Tax What When it's due
PAYE Return and payment Lge employers
5 December AND 20 December
16 January AND 20 January
Sml employers
20 December
20 January
GST Return and payment for 30 Nov
Return and payment for 31 Dec
16 January
30 January
FBT Quarterly return and payment (if paid quarterly) 20 January

 

Provisional Tax

The following provisional tax is due for payment on 16 January 2017:

  • March balance date if paying in 3 instalments
  • May balance date if paying in 2 instalments
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