Bringing employment types and new leave units to all New Zealand payroll users

We’re updating Xero payroll for New Zealand to make it easier for you to manage leave and comply with New Zealand’s Holidays Act requirements. 

Features that were initially introduced for new Xero users in August 2024 will be rolled out to everyone using Xero payroll in New Zealand later this year. A conversion tool will be available in Xero to help you make the switch.

What’s changing

• You’ll be able to assign each employee an employment type, making it easier to set up and maintain accurate leave entitlements.
• Leave balances will move from being tracked in hours to being tracked in weeks and days, aligning with current Holidays Act requirements. This also means you’ll no longer have to manually adjust leave balances when working patterns change.
• An end date can now be included for employees on fixed-term contracts 
• A tool will be available in Xero later this year to help you easily make changes and use the new payroll features.
  

Note: Once you’ve changed to using the new payroll settings they will become your default. You won’t be able to switch back to the old setup.

What to expect

When the payroll updates are ready, you’ll see a banner on the Employees page in Xero payroll which will guide you through the steps to set up and start using the new employee type and leave units.

What you can do to prepare now

To make the move as smooth as possible, it’s a good idea to start reviewing your payroll setup including pay runs, employee records and leave requests now. This will make the process easier, save you time, and help ensure everything is ready when the conversion tool becomes available later this year.

• Fixed-term employees. You can now add a fixed-term end date for any employees on a fixed-term contract (see how in Xero Central). This will allow them to be set up as a fixed-term employee.
• Complete review of employee setup. Check out the information about whether your employees are ready to be converted in Xero Central. Key features to check include:
  – pay and work pattern
  – leave balances and entitlements
  – holiday pay setting

What you’ll need to do when the tool is available

• Check employee readiness. We’ll flag any employees where settings need updating and provide guidance on how to amend them.
  
• Review employment types. Xero will suggest employment types for each employee where possible. You’ll be able to check and confirm these so that your setup is accurate from day one.
  
• Check leave balance conversions. Review how current leave balances will be converted from hours to weeks and days to make sure everything adds up as expected.
  

You’ll find step-by-step guidance in-product and on Xero Central before and during the conversion period.

What’s next

We’ll let you know as soon as the conversion tool is available. In the meantime, reviewing your payroll setup and employee records will help make the process smoother when the time comes.If you have questions, our team is here to help. Check out the latest updates and guidance on Xero Central.