Employing in New Zealand
Employment laws in New Zealand are governed primarily by the Employment Relations Act 2000, which sets out the framework for relationships between employers, employees, and unions. The law mandates minimum employment standards, including minimum wage, hours of work, and leave entitlements such as four weeks of annual holidays and ten days of sick leave. Employers must provide a safe and healthy work environment and are prohibited from discriminating against employees based on race, sex, age, or disability. Collective bargaining is encouraged, and employees have the right to form unions and engage in strikes. The law also outlines procedures for ending employment and resolving disputes through bodies like the Employment Relations Authority and the Employment Court. Additionally, employers must provide written employment agreements to all employees, detailing terms and conditions of employment.
Onboarding time
Minimum Wage
Employer costs
Employee costs
Onboarding time
Team APAC can onboard your talents within an average of 48 hours.
Minimum Wage
From April 1, 2025, the national minimum wage will be $23.50/ hour.
Employer costs
- Employer KiwiSaver / ESCT – 3%
- Employer ACC Levy – 0.21%
Employee costs
- Employe KiwiSaver – minimum of 3% up to a maximum of 10%
Payroll
In New Zealand, the payroll process involves several key steps and responsibilities. The payroll process in New Zealand requires careful management of tax obligations, employee contributions, and record-keeping.
Payroll cycle
The payroll cycle in New Zealand typically operates on a bi-monthly or monthly basis, with employers needing to maintain accurate records for at least seven years. Payslips must include essential employee information, such as IRD numbers and pay details.
Payroll calculations
Calculating payroll involves determining gross pay, subtracting pre-tax deductions, such as KiwiSaver, a pension scheme, and the Employer Superannuation Contribution Tax (ESCT) on employer contributions. Additionally, employers must deduct Accident Compensation Corporation (ACC) levies and manage other voluntary deductions.
Compliance requirements
Employers must register with the Inland Revenue Department (IRD) and withhold income taxes under the Pay As You Earn (PAYE) system, which is part of a progressive income tax system.
Additional payments
13th Salary
Bonuses are agreed upon between the employer and the employee and taxed as normal income.
Bonuses
Some companies in New Zealand may offer bonuses as part of their employee benefits package, including annual bonuses or even a 13th-month bonus, although this is not as common as in some other countries.
Commissions
Commissions are commonly provided in New Zealand, particularly in industries such as sales, real estate, and insurance brokerage.
Other allowances
Travel, meal, uniform, accommodation, cultural, and wellbeing allowances are various forms of compensation provided to employees for specific purposes.
Taxes
Employers in New Zealand are required to pay payroll tax on wages, benefits, and Employer KiwiSaver / ESCT contributions made to or on behalf of their employees.
Employee Income Tax
In New Zealand, individual income tax rates are progressive, meaning higher income earners pay higher tax rates. As of the latest information, the tax rates and brackets for the 2024-2025 tax year are as follows:
Income Tax
- 10.5% 0 NZD – 14,000 NZD
- 17.5% 14,001 NZD – 48,000 NZD
- 30% 48,001 NZD – 70,000 NZD
- 33% 70,001 NZD – 180,000 NZD
- 39% 180,001 NZD and over
Employment eligibility
To be eligible to work in New Zealand, individuals must meet specific criteria based on their status or the type of visa they hold.
Visa
Employees have multiple options for obtaining a New Zealand work visa, with several common types available. These are: the Accredited Employer Work Visa, the Skilled Migrant Category Resident Visa, the Straight to Residence Visa, the Post Study Work Visa, the Student and Trainee Work Visa, and the Working Holiday Visa. Each of these visas caters to different needs and circumstances, providing a range of pathways for individuals seeking to work in New Zealand.
Visa types
- Accredited Employer Work Visa
- Skilled Migrant Category Resident Visa
- Straight to Residence Visa
- Post Study Work Visa
- Student and Trainee Work Visa
- Working Holiday Visa
Compliance documents types
- Passport or travel document
- 2 passport-sized color photographs
- Medical and chest x-ray, health questionnaire, and medical exam
- Character questionnaire and police certificates from the individual’s country of origin as well as any place they’ve lived for at least 5 years since they turned 17.
Background check
Background checks are an essential part of the work visa application process in New Zealand, ensuring that applicants meet character and identity requirements. These checks typically include police certificates to confirm the absence of a criminal record, which must be obtained from the applicant’s country of origin or any country where they have lived for at least five years since turning 17. Written consent is required for criminal record checks, and privacy laws regulate the use of such information. Employers may also verify employment history, education credentials, and conduct medical screenings if relevant to the job. Additional checks, such as credit history or social media reviews, are permissible only when directly related to the job’s responsibilities. Providing false or misleading information during the visa application process can lead to rejection. All background checks must comply with New Zealand’s legal and privacy standards to ensure fairness and transparency.
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Benefits
Key statutory benefits include annual leave, paid public holidays, and sick leave. Employers are likewise required to contribute to KiwiSaver, a voluntary retirement savings scheme, matching employee contributions at a minimum rate of 3%. Public healthcare is free or low-cost for residents, supplemented by accident insurance funded through employer contributions.
Private health insurance
Private health insurance in New Zealand is designed to cover healthcare costs not fully covered by the country’s public healthcare system. It provides additional benefits and flexibility in healthcare choices.
Team APAC providers
- SafetyWings
- Henner
- IMG/ ALC Global
Mandatory benefits
In New Zealand, employers are legally required to provide several mandatory employee benefits. These include paid leave, which encompasses annual leave, public and alternative holidays, parental leave, sick leave, and bereavement leave. Another mandatory benefit is the Accident Compensation Corporation (ACC) levy, which provides insurance coverage for accidental injuries both at work and outside the workplace. Additionally, employers must contribute to Kiwisaver, a voluntary retirement savings scheme, by automatically enrolling eligible new employees and contributing a minimum of 3% of the employee’s gross salary. These benefits ensure that employees have financial security and support in various aspects of their lives.
Mandatory benefits in New Zealand
- Paid leaves
- Accident Compensation Corporation (ACC)
- Kiwisaver
Working hours
The workweek is generally defined as 40 hours and five days in length unless otherwise negotiated and included in the employment agreement. The standard workweek is from Monday to Friday. There are no specific requirements as to how long breaks should be or when they should be scheduled, which is left for employers and employees to negotiate.
Working hours per day
The standard workday is 8 hours.
Working hours per week
The standard workweek is 40 hours.
Overtime pay
Overtime payment is not mandatory. If there is overtime, hours worked on a public holiday are paid at 150% of the regular hourly rate.
Leave
Other mandatory benefits include annual leave, paid public holidays, and sick leave. Statutory leave entitlements include public holidays and other forms of leave as outlined in the Employment Relations Act 2000.
Annual leave
All employees are entitled to at least four weeks’ paid annual vacation, awarded on the first and subsequent anniversaries of starting work. Accrued leave can only be converted into cash in limited circumstances. Employees must be given the opportunity to take at least two of their four weeks’ vacation entitlement continuously if they wish to do so.
Sick leave
The Holidays Act 2003 provides employees a minimum of five days’ paid sick leave a year after the first six months of continuous employment and an additional five days paid sick leave after each subsequent 12 month period. Additionally, any unused sick leave can be carried over to the following 12-month period, allowing for a maximum accumulation of up to 20 sick days.
Personal/Carer’s leave/ Maternity leave
In New Zealand, what is often referred to as maternity leave is actually called Primary Carer Leave. This leave is available to employees who become the primary care provider for children under six. To qualify, employees typically need to have worked at least 10 hours a week for 12 months. They are entitled to up to 26 weeks of leave, during which they receive a payment capped at NZD 661.12 gross per week, funded by the government. Employers may choose to supplement this amount to match the employee’s full salary.
Paternity leave
Employees are entitled to 26 weeks of parental leave. Both parents can decide how to distribute the time off. Either parent can take parental leave. Parental leave is unpaid.
Paternity leave
Employees are entitled to a period of unpaid paternity leave, which can range from one to two weeks, depending on their length of service. This leave can be taken within a specific timeframe, starting from 21 days before the expected birth date and ending 21 days after. For those who have worked for at least six months, averaging a minimum of 10 hours per week, one week of leave is available. Employees who have been with the company for 12 months or more, also averaging at least 10 hours per week, qualify for a longer period of two weeks.
Other types of leave
Long service leave
Long service leave is not mandatory in New Zealand. While many employers choose to offer long service leave, the terms and conditions vary widely depending on the specific agreement or policy in place.
Bereavement leave
In New Zealand, bereavement leave is mandatory under certain conditions. Employees are entitled to a minimum of three days of paid bereavement leave if they have worked for their employer for at least six months, averaging at least 10 hours per week and at least one hour in every week or 40 hours in every month. This leave can be taken for the death of an immediate family member, a miscarriage, or stillbirth, among other circumstances. While the law mandates a minimum entitlement, employers can choose to offer more generous bereavement leave policies as part of their employment agreements.
Family & domestic violence leave
Family violence leave is mandatory in New Zealand for employers to provide to eligible employees. The Domestic Violence – Victims’ Protection Act 2018 requires employers to offer up to 10 days of paid family violence leave annually to employees who experience family violence, including those who need to support a child affected by such violence. Employers are legally obligated to provide this leave and cannot discriminate against employees for taking it. Additionally, employees can request flexible working arrangements for up to two months to support their safety and well-being.
Termination
Terminations in New Zealand are governed by strict employment laws that do not allow for at-will termination, meaning employers must have just cause to dismiss an employee. Acceptable reasons for termination include voluntary resignation by the employee, mutual agreement between the parties, expiration of a fixed-term contract, or unilateral action by the employer under specific conditions. Employers can terminate employment during a probation period, for objective grounds such as redundancy, through disciplinary dismissal, or due to poor job performance or unsuitability for the role. Regardless of the reason, employers are required to follow a fair and transparent process, including providing notice as stipulated in the employment agreement or a “reasonable” notice period if not specified. Employees also have the right to challenge dismissals they believe are unfair or unjustified through personal grievance claims. In cases of serious misconduct, immediate dismissal without notice is permissible. However, employers must act in good faith and ensure compliance with legal standards to avoid potential disputes or legal repercussions.
Termination process
In cases of serious misconduct, an employer may terminate an employee without notice and without paying out the notice period. “Serious misconduct” must undermine or destroy the relationship of trust and confidence that exists between the employer and the employee.
When dismissing an employee for serious misconduct, the employer must still follow a fair process, and the employee must be given a chance to both hear and respond to the allegations of misconduct.
Termination reasons
Grounds for dismissal include serious misconduct, which involves behavior that undermines the employer’s trust and can lead to immediate termination without notice. Repeated misconduct, where an employee consistently fails to meet workplace standards despite warnings, is another valid reason. Performance issues may also justify dismissal if the employee fails to meet job expectations despite receiving support and opportunities to improve. Redundancy occurs when a role becomes unnecessary due to business changes, such as technological advancements or financial constraints. Incapacity, often due to health issues, can lead to dismissal if the employee is unable to perform their duties. Incompatibility arises when an employee’s personal characteristics or behavior hinder their ability to work effectively within the organization. Lastly, during a trial period, employers may dismiss employees for unsatisfactory performance or other valid reasons, often providing verbal explanations rather than written ones.
Notice period
Employers in New Zealand are required to provide notice in accordance with the terms outlined in the employment agreement. Typically, for many roles, a notice period of four weeks is considered standard and fair.
Severance Pay
Unless covered in the individual or collective employment agreement, an employer is under no obligation to pay an employee severance beyond payment of all wages due at termination and compensation for any unused vacation.
Probation period
In New Zealand, a probationary period is a common practice used by employers to assess new employees’ suitability for a role. The period must include a fair assessment of the employee in writing. A probation period of three months is common.
Probation Period days
- 90 days Minimum probation period
- 180 days Maximum probation period
