Employer Updates Nov 2012

Trial Periods prove Successful
Trial Periods have proved to be a great success for both employees and employers.

Employee Trials prove successful

Recent research by the Department of Labour has confirmed that trial periods before employing new staff appear to be working for both employers and employees.

Employers, whether small, medium or large, have been using trials to ascertain the viability of hiring a new staff member.  Around 60% of employers questioned confirmed they had used trial periods and 80% of those employers had offered jobs to those employees on trial.  An interesting point was that 40% would not have contemplated hiring anyone without being able to use the trial period.

The trial period enables the employer to assess the skills of the worker and whether they will blend with existing staff without the worry of possible costs incurred if the worker is found to be unsuitable.  This has also worked well for the employee who may not yet have experience due to youth or change of job, or those who have not been in employment for a while due to a variety of reasons.

It would appear, therefore, that this system is turning out to be a great opportunity for both sides of the workforce and is creating jobs which may not have been offered otherwise.  70% of employers say they will definitely be using the trial period in future.


Employer Superannuation Contribution Tax (ESCT)

Employer contributions paid to KiwiSaver schemes are liable for ESCT as from 1st April 2012.  As detailed in the table below ESCT must be deducted from employer contributions at the employees ESCT marginal tax rate.

ESCT threshold amount ESCT rate
$0 – $16,800 10.5%
$16,801 – $57,600 17.5%
$57,601 – $84,000 30%
$84,001 and above 33%

Computerised payroll systems which have been updated for the 2013 year should show the correct ESCT deductions from employer KiwiSaver contributions.

After reviewing various employers wage records it has been found that even though the ESCT amount is calculated correctly it does not always appear on the monthly Employer Deductions (IR 345) at Box 8 and the payment has not been made to Inland Revenue.

If you have any problems regarding this please contact us.