The Employment Hero Payroll ESCT Report Explained

Where to find the ESCT rate report

Navigate to Reports and to IRD Reporting.

Where to find the ESCT rate field in Employment Hero Payroll

Under the employee’s pay run defaults.

How is the ESCT rate determined?

If an employee is a member of KiwiSaver, the employer must pay a minimum contribution of 3% of the employee’s gross earnings. This will increase to 3.5% as from April 1^st 2026. This employer’s contribution is subject to the employer superannuation contribution tax aka ESCT.

The ESCT rate is set at the start of each new financial or tax year (April 1^st to March 31^st of the following year). It is a set and forget rate i.e. it is not reviewed or amended later on during the tax year. The rate is based on the sum of the employee’s gross earnings and of the gross employer contribution from the previous tax year. This means that employees fall into 2 categories:

Key points

• Those with gross earnings for the whole previous tax year: Started with the employer on or before April the 1st of the previous tax year.
• Those with gross earnings for part of the previous tax year: Started after April the 1st of the previous tax year.

Tax year filtering

To set ESCT rates for the upcoming tax year, select the previous tax year.

e.g.: To set ESCT rates for the 2026-2027 tax year, select the 2025-2026 tax year.

Start date

This is the start date saved under the employee details.

HGE (historical gross earnings) in the period

If an employee’s first date paid in Employment Hero Payroll falls after April 1^st, the system will check for HGE (historical gross earnings) and add these pro rata to the Actual Gross From Previous Tax Year.

Pay Schedule

This is the employee’s current pay schedule as saved in the employee’s pay run defaults at the time the report is run.

Location

This is the employee’s current primary location as saved in the employee’s pay run defaults at the time the report is run.

KWS Status

This is the employee’s current KiwiSaver enrolment option as saved in the employee’s KiwiSaver settings at the time the report is run.

Payroll History Category

Whether the employee has gross earnings for the whole or part of the previous tax year will impact on the data used to recommend the new ESCT rate for the upcoming tax year. The report identifies which category the employee falls into:

• Whole previous tax year
• Part of previous tax year

First Date Paid in Previous Tax Year

This is the first date paid falling into the previous tax year.

Last Date Paid in Previous Tax Year

This is the last date paid falling into the previous tax year.

Actual Gross From Previous Tax Year

Sum of taxable earnings from all pay runs with date paid falling between 01/04 and 31/03. Note that the date paid determines which tax year a pay period belongs to, not the pay period start or end dates.

KWS Employer Contribution Rate (KSR)

This is the employee’s employer contribution rate as saved in their KiwiSaver details as at the time the report is run.

Actual Gross KWS Employer Contribution from previous FY

Sums the employee’s KiwiSaver Employer net contribution + ESCT from the previous tax year. This can be reconciled from the employee’s payment history report run from 01/04 to 31/03 for the previous tax year.

Total Gross + KWS Employer Contribution

Sums Actual Gross From Previous Tax Year + Actual Gross KWS Employer Contribution from previous FY

Actual Current ESCT Rate

This is the employee’s ESCT rate as saved in their pay run defaults as at the time the report is run.

Estimations

The Employment Hero Payroll ESCT Report Explained

1. Estimated Gross for new tax year based on previous tax year

The estimation is used for employees where the Payroll History Category is part of previous tax year. The system will sum taxable earnings from the previous tax year that meet the following criteria:

                The pay runs’ dates paid fall between 01/04 and 31/03 of the previous tax year.

                The pay period is not a part pay period. This means the system will drop the first part pay period (where the employee’s start date falls after the pay period start date) to achieve a more accurate estimation.

• The outcome will be total taxable earnings from full pay periods.
• Count the quantity of full pay periods.
• a/b = average taxable earnings per pay period.
• c x pay periods per tax year i.e. 12 for monthly pay schedule, 26 for fortnightly pay schedule, 52 for weekly pay schedule.
• Estimated KWS Employer Contribution Rate

The system will check for the employee’s current employer contribution rate as saved under the employee’s KiwiSaver details as at the time the report is run. If this value is zero at the time the report is run, the system will use 3% by default.

The Employment Hero Payroll ESCT Report Explained (part 2)

1. Estimated Gross KWS Employer Contribution for new FY based on previous FY

Estimated Gross for new tax year based on previous tax year

X

Estimated KWS Employer Contribution Rate

The Employment Hero Payroll ESCT Report Explained (part 3)

1. Estimated Total Gross + KWS Employer Contribution

1 + 3

Recommended ESCT Rate

The system looks up the ESCT rate table and selects the appropriate rate for the calculated Estimated Total Gross + KWS Employer Contribution.

IR335 Employer's guide October 2025

Update the ESCT rate for the upcoming tax year

From the on-screen report, select the employee(s) and click Update select employees.

The employee’s ESCT rate will be updated in their Pay Run Defaults on April 1^st. Prior to this occurring, you will notice a warning message beneath the ESCT Rate field for the employee. The rate must be updated prior to creating the first pay run for the new tax year. Once updated, the new ESCT rate will take effect from the first pay run with a date paid on or after April 1^st