The 2023 RSE Scheme Updates

As we approach October 1st, 2023, the RSE scheme is set to undergo significant amendments aimed at enhancing the financial security and overall well-being of RSE workers. 

Here are the key updates:

Minimum Wage Increase

The minimum hourly wage for RSE workers will see a 10% increase, raising it from $22.70 to $24.97. Consequently, the minimum weekly wage (based on a 30-hour work week) will now be $749.10, up from the previous $681.00. If a worker’s earnings from piece rate work (income based on quantity produced rather than hours worked) fall below this minimum wage threshold, employers are required to top up their wages to meet the minimum requirement. Conversely, if workers earn more through piece rate work, they will be paid accordingly without any top-up. To learn more about why minimum wage top ups matter and how to automate them to guarantee compliance, check out our guide on piece rate.

More Flexible Sick Leave Entitlements

A notable change is coming to the sick leave entitlements for RSE workers. Previously, workers would receive 10 days of sick leave after six months of employment, with an additional 10 days after a year. But gone are the days of waiting six months for sick leave days. Now, workers will receive two sick leave days right from the get-go, with an additional two days accrued each month thereafter, until they reach the 10-day mark at four months of employment.

Here is a table from  that shows the new RSE worker sick leave accumulation:

For more detailed information, visit Immigration NZ for the official update documentation.

These updates are a stride towards creating a brighter, fairer work environment for RSE workers, keeping in step with New Zealand’s commitment to fair employment practices and nurturing the well-being of all workers on its land.

Implications for Payroll

The upcoming adjustments to the RSE scheme are not just for you to know; they will require you to make some proactive changes to your payroll processing if you want to stay on the right side of legislation. Or, have a payroll system that has taken the right steps to implement these changes for you. Let’s break down how these changes may impact your payroll operations and the steps to ensure seamless compliance.

• Updating Pay Rates: First things first, you’ll have to make sure your RSE workers are receiving that new minimum wage of $24.97. If the current pay rate for any of your RSE workers is lounging below the new minimum wage of $24.97, it’s time to give it a bump upwards. Ensuring every RSE worker’s pay rate is updated in your payroll system before the changes kick in on October 1st is your first step towards compliance.

• Sick Leave Adjustments: Next on the agenda is the new sick leave entitlement scheme which will require a bit more work to make the correct adjustments if your payroll system hasn’t implemented the updated scheme. You’ll need to ensure your payroll processes are up to speed with the new setup – two sick leave days from day one, with two more added each month until the 10-day mark at four months. If manual adjustments and record keeping of sick leave sounds like a headache, it might be a good time to check for a payroll software solution that can automate these changes. A little software magic can go a long way in keeping things streamlined!

• Staying in the Clear: Compliance isn’t just a fancy word; it’s your shield against potential audits and labor inspection visits. The last thing you want is a surprise knock on the door from the IRD because someone spotted a hiccup in your payroll. Keeping everything above board with the new RSE scheme changes is a solid move to keeping your employees happy. And remember, a happy employee is less likely to raise concerns with labor inspectors. So, ensuring your workers receive what they’re rightfully entitled to is not just about compliance; it’s about fostering a positive work environment.

• Avoiding Pitfalls: Staying informed about the RSE scheme updates is your best bet to avoid stumbling into pitfalls. It’s good practice to have a chat with your payroll provider or a knowledgeable advisor to ensure you’ve got all your bases covered.

So there you have it. A little prep work now can save you a heap of trouble later. And while you’re at it, why not explore how a trusted partner like Crystal Payroll can make navigating these changes a breeze? With the right support, you can face the upcoming RSE scheme updates with confidence and keep your focus where it belongs – on growing your business.

How can Crystal Payroll help?

Our commitment to streamlined processes is echoed by Craig Mill and Barbara Mortensen of Focus Labour Solutions Ltd. Since forming their company in Blenheim in 2008, they’ve been addressing South Island businesses’ labor demands, especially during peak times when their staff count inflates to 120 casual staff alongside 16 permanent staff. The diverse nature of their workforce, including RSE staff from Vanuatu, Kiribati, and Tuvalu, alongside Kiwi staff and backpackers, necessitated a robust payroll system capable of handling complex piece rates and paid break calculations.

Barbara Mortensen shares her experience: 

We have RSE staff from Vanuatu, Kiribati, and Tuvalu and Kiwi staff and we also employ backpackers, so there’s a lot of record-keeping and you need good systems to make sure you keep on top of things and that’s where Crystal Payroll is good – particularly on piece rates. It’s in those complex piece rates and paid break calculations that Crystal Payroll really excels. Performing the calculations clearly and simply, ensuring everyone is getting paid fairly and correctly.

RSE Compliance Made Simple: Take Action Today

Ready to make the transition? Crystal Payroll is your go-to partner for navigating the RSE scheme updates with ease. Explore our offerings and see how we can make a difference in your payroll processing. Get in touch with us today, and let’s ensure your payroll system is compliant, efficient, and ready for the upcoming changes.

NZ piece-rate legislation overview

New Zealand’s payroll legislation, particularly the laws around minimum wage top-up and paid break requirements, can get complicated for employers. Here’s the overview:

• Minimum Wage Top-Up: No matter how a worker is paid, they must never earn less than the minimum wage over a pay period. If a piece-rate worker’s total earnings don’t reach this minimum threshold, employers are required to top up their wages to ensure they meet this standard.
• Paid Breaks: Workers are entitled to paid rest breaks and unpaid meal breaks. The exact number and duration depend on the length of their work period.

Piece-rate and RSE workers

The horticulture and viticulture industries in New Zealand often experience seasonal peaks in labor demand, especially during harvesting and pruning times. Due to these peaks, domestic labor may sometimes be insufficient to meet the demands. The Recognised Seasonal Employer (RSE) scheme addresses this by allowing employers to recruit overseas workers, primarily from Pacific countries.

Given the seasonal nature of the work, many employers in these sectors use piece rates to incentivize workers to be more productive. The more they pick or produce, the more they earn. This kind of remuneration structure can be particularly attractive to RSE workers, as many aim to maximize their earnings in a limited time frame before returning to their home countries.

The piece rate system and the RSE scheme are interconnected mechanisms that help address labor needs in New Zealand’s horticulture and viticulture sectors. Both systems, when managed ethically and legally, can create a win-win situation: industries get the labor they need, and RSE workers have the opportunity to earn money to support their communities back home.

You can find out more about RSE workers and the different employment types in our blog post here.

Average Daily Pay and RSE workers

When we talk about RSE workers, their income predominantly comes from piece rates. This presents a unique challenge when addressing issues like sick leave, statutory holidays, or any other form of alternative leave. Here’s why: With their income being so variable, how do we ensure they’re compensated fairly during these off days?

The solution: Average Daily Pay.

Because of the inconsistency in the working patterns of RSE workers, during periods like sick leaves, holidays, or alternative leaves, they are compensated based on their average daily earnings. This guarantees a fair compensation model that is reflective of their usual earnings.

When it comes to annual leave, the calculations undergo a slight change. Given their fluctuating work hours, the leave RSE workers accrue is based on gross earnings, not default hours (because, let’s face it, determining default hours for them is next to impossible). So, if an RSE worker decides to take a day’s annual leave, how do we compute it? The answer lies in comparing their Ordinary Weekly Pay and Average Weekly Earnings where the worker will be entitled to the higher hours of the two.

Lastly, similar to fixed-term contract employees, RSE workers have a choice. They can discuss and decide if they wish to receive 8% of their gross earnings with each paycheck or accrue that leave to receive a lump sum at the end of their employment. Typically, many RSE workers opt for the former, preferring that extra bit of pay with every pay cycle.

Calculating minimum wage top-up: Making sure everyone gets their due

Let’s break it down:

1. Determine Total Earnings: Firstly, calculate the total earnings from piece-rate tasks over the pay period. For instance, if a worker picked 100 baskets of strawberries at $2 each, their total earnings would be $200.
2. Calculate Total Hours Worked: Record all hours the worker was engaged in tasks.
3. Check Against Minimum Wage: Multiply the total hours worked by NZ’s minimum wage rate ($22.70 per hour as of 1st April 2023). If this amount is higher than the piece-rate earnings, the difference is the top-up required.

Example: For 10 hours worked, at a minimum wage of $22.70/hr, the total minimum wage would be $227. If the worker only earned $200, you’d need to top up by $27.

Calculating paid breaks: A well-deserved break, well-calculated

Paid breaks are a little trickier. Here’s how you go about it:

1. Determine Break Entitlement: For every 4 hours worked, a worker is entitled to a 10-minute paid break.
2. Calculate Break Pay: Multiply the average hourly rate for the day (total earnings/hours worked) by the fraction of the hour the break took.

Example: If the worker earned an average of $30/hour and took a 10-minute break, they’d be entitled to $30 x (10/60) = $5 for that break.

Importance of compliance and penalties for non-compliance

NZ’s employment legislation isn’t just guidelines – they’re compulsory. Non-compliance can lead to hefty financial penalties. But beyond that, there’s potential damage to your business reputation, which can affect your relationship with workers and partners. It’s not just about money; it’s about trust.

As stated in a position statement from the official Employment New Zealand website,

Labour inspectors check that breaks are paid and provided for by employers. Penalties can be ordered for failures to comply with requirements for paid rest breaks and meal breaks”. The statement underscores the vigilant monitoring and the real consequences for businesses failing to ensure that their employees receive their rightful breaks.

Additionally, in light of the 2023 updates shared by Immigration New Zealand concerning RSE workers, changes are afoot. Starting October 1st, 2023, these workers will experience modifications to their sick leave entitlements and minimum wage. Notably, they’ll be granted two days of sick leave from the commencement of their employment, with an additional two days awarded each month. By the time they reach their four-month work anniversary, they’ll have accumulated a total of 10 sick leave days. Furthermore, the minimum wage has been adjusted to $24.97 (up from $22.70, factoring in a 10% increase).

Given these evolving standards and expectations, the message for employers is to stay informed, remain proactive, and ensure they’re not just meeting but exceeding the required standards.

How Crystal Payroll can help

At Crystal Payroll, we’ve designed our system to simplify and streamline these calculations so you can have the accuracy without the headache. Our payroll system has features tailor made for the horticulture industry and ensures that you’re always compliant with NZ payroll legislation, making minimum wage top-up and paid break calculations a breeze.

Here’s a look into what our payroll software can do for you to automate minimum wage top-up and paid break calculations.

Minimum wage auto top up

Crystal can ensure that workers will not be paid under the minimum wage with our auto-top up functions. From simply adding the days in which RSE employees are working at their piece rate items, the system will automatically top-up the employee if they meet under their contracted rate. 

Below is an example of the system not needing to top-up due to the piece rate items earning more than their contracted wage rate.

Here is one where the employee needs a top-up to meet their contracted rate.

Paid Break Calculations

Crystal Payroll automates the paid break calculations within the system, so as the employer you will only need to input in the number of paid breaks each employee had during the week.

Simplify your payroll today

So why do these calculations alone when we’re here to help? Not only do we help with the tricky formulas, but we also update you on legislative changes, ensuring you’re always ahead of the curve. 

Seeking to further ease your payroll processing? Consider our Crystal Timesheets add-on. This feature empowers your employees, allowing them to record piece rates and hours worked. Not only does this foster transparency, but it also cuts down the processing time considerably, as a significant chunk of the task is handled by the employees themselves.

If you’re interested in integrating Crystal Timesheets into your system, Click here to learn more and elevate your payroll processing experience.

Let’s work together to ensure your piece-rate payroll calculations are accurate, seamless, and hassle-free.