Employer of Record in New Zealand

Businesses can only operate smoothly in New Zealand if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in New Zealand below, to avoid any compliance issues.

Employment Contract Requirements

New Zealand places a strong emphasis on fair employment practices and has established a robust legal framework to govern the employer-employee relationship. When hiring in this territory, employers are expected to adhere to Employee Relations Act 2000. Key aspects of employment in New Zealand include:

• A written employment agreement
• Clearly defined renumeration and benefits
• Working hours and designated breaks
• KiwiSaver (employers need to inform employees about the KiwiSaver retirement savings scheme and their right to choose whether to participate)

Onboarding Process

We can help you get a new employee started in New Zealand quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in New Zealand

Typically, full-time hours range from 7.5 to 8 hours per day. It is essential for the employment contract to specify the weekly hours, which may be no more than 40 hours per week.

Overtime in New Zealand

The rate of pay for overtime worked must be agreed to between the employer and the employee. This may be factored into the employee's salary or paid at the employee's normal rate of pay. There may be an agreement to pay more than this, but not less.

Probation Period in New Zealand

In New Zealand, both probationary periods and statutory trial periods are distinct employment practices. These are described in detail below:

• Statutory trial periods, applicable to employers with fewer than 20 employees, have a mandatory maximum duration of 90 days. During this period, termination can occur without specifying a reason.
• Probationary periods of between 3 to 6 months are common practice in New Zealand, although there is no statutory probation period.

Fiscal Year in New Zealand

1 April - 31 March is the 12-month accounting period that businesses in New Zealand use for financial and tax reporting purposes.

Payroll Cycle in New Zealand

The payroll cycle in New Zealand is usually bi-monthly or monthly, with employees being paid as stipulated in the employment agreement.

Minimum Wage in New Zealand

The minimum wage for employees in New Zealand is typically 23.15 NZD per hour, amounting to ~4,012.67 NZD per month for a typical 30-40 hour work week.

Bonus Payments in New Zealand

While legal regulations do not mandate a 13th month salary, it is a customary practice to provide employees with performance-based bonuses.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 4% on top of the employee salary in New Zealand.

Employee Payroll Tax Contributions

In New Zealand , the typical estimation for employee payroll contributions cost is around 1.39%.

Individual Income Tax Contributions

New Zealand has a progressive pay-as-you-earn (PAYE) tax system for individual income. The tax rates are generally based on different income brackets, and the rates may vary for different types of income. The individual income tax ranges from 10.5% to 39%.

Pension in New Zealand

In New Zealand, there is no mandatory pension system, but employees can voluntarily join KiwiSaver, where employers must make compulsory contributions.

Employees can choose a contribution rate of 3%, 4%, 6%, 8%, or 10% of their salary and have the option to opt out within the first eight weeks of enrollment. Additionally, New Zealand offers NZ Super, a non-contributory public pension for residents aged 65 and older.

In New Zealand, work permits and visas are critical for employers looking to hire foreign workers. Employers must navigate different visa categories, such as the Essential Skills Work Visa for essential or skilled roles, the Skilled Migrant Category Resident Visa for permanent residency, and the Working Holiday Visa for young travelers. The application process involves meeting health and character requirements, providing a valid job offer, and proving that no suitable New Zealand workers are available for the position. Employers should also be aware of visa fees, processing times, and the need for work permit renewals to ensure ongoing compliance.

Mandatory Leave Entitlement in New Zealand

The annual leave entitlement in New Zealand is 4 weeks for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In New Zealand

Public holidays in New Zealand are widely recognized, with potential variations in dates each year. While these holidays are observed nationwide, their occurrence might differ annually, and in the event of a holiday falling on a Sunday, the succeeding Monday is typically designated as the day off. These public holidays include:

Paid Time Off in New Zealand

Employees are entitled to four weeks of paid annual leave, a benefit accessible once they complete their initial year of service with the employer. When it comes to the applicability of annual leave, the following details are noteworthy:

• Upon termination, unused leave is compensated.
• Upon the end of the year, unused leave can be carried over.
• For fixed-term workers engaged for less than 12 months, an alternative arrangement exists where they receive 8% holiday pay in lieu of the standard four weeks of leave.

Maternity Leave In New Zealand

In New Zealand, maternity leave, also known as primary carer leave, lasts for 26 weeks and is funded by the government. It is a statutory requirement and can start up to 6 weeks before the expected due date. If medical reasons require an earlier start, the mother is still entitled to a full 20 weeks after childbirth. Additional details about maternity leave are as follows:

• Pregnant employees have the right to take up to 10 days of unpaid leave for pregnancy-related appointments.
• The entitlements for primary carer leave also extend to employees assuming the role of primary carer for an adopted child under 6 years of age.

Paternity Leave In New Zealand

Primary Carer leave is also applicable where their spouse or partner has given birth, but the employee will take primary responsibility for the care of the child.

• One week of unpaid leave if theyve worked for you for six months for at least an average of 10 hours a week.
• Two weeks of unpaid leave if theyve worked for you for 12 months for at least an average of 10 hours a week.

Sick Leave In New Zealand

Employees in New Zealand benefit from a sick leave entitlement, as mandated by the Holidays Amendment Bill. The leave is not pro-rated, ensuring that employees receive the full entitlement regardless of their employment status. Sick Leave is applied as follows:

• After six months of continuous employment, individuals are entitled to a minimum of 10 days of sick leave annually.
• Casual employees, with six months of continuous employment or an average of 10 hours per week, are also eligible for sick leave.
• Up to 10 unused sick days can be carried over each year, accumulating to a maximum of 20 days in total

Parental Leave In New Zealand

Parents in New Zealand have the option of taking extended leave, which can be shared between both partners and even be taken concurrently. Parental leave entitlements are subject to the following details:

• Parental leave duration, up to 52 weeks, depends on the service length of both parents, provided they have each been employed by their current employer for more than 12 months. This is paid by a state fund. Pay is the greater of ordinary weekly pay and average weekly earnings, up to a maximum gross amount of 754.87 NZD per week.
• This provision is in addition to primary carer and partners leave.
• Extended leave is unpaid.

Special Leave

10 days of unpaid leave, which is given to employees for pregnancy-related appointments.

Bereavement Leave

This considers the relationship to the deceased, responsibilities for arrangements, and cultural practices, offering three days of paid leave for the loss of a close family member.

Termination Process in New Zealand

In New Zealand, the termination process depends on factors like the contract type, grounds for termination, and agreements in place, including employment and collective agreements.

• Gross misconduct
• Performance deficiencies
• Incompatibility
• Medical Issues

Notice Period in New Zealand

In New Zealand, employers usually follow notice periods of 2 to 4 weeks as stated in employment contracts. When no notice period is specified, a reasonable one is determined based on factors like service length and industry norms.

Severance in New Zealand

Severance payout is only obligatory if an agreement between the employer and employee has been reached. Consequently, an employee's final pay encompasses compensation solely for hours worked and any accrued and unused annual leave days, unless otherwise stipulated through a mutual severance arrangement.