Hiring Talent And Managing Payroll In New Zealand

Hiring in New Zealand? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in New Zealand.

Employment Norms in New Zealand

New Zealand is an island nation in the South Pacific. The country has a huge talent pool of highly skilled and educated workforce. The employee-friendly norms make it an attractive destination for many talented job-seekers in remote roles as well. Employers looking to expand to New Zealand may find it difficult to navigate through the strict employment norms of the country. EOR services assist employers in employee payrolls, taxes, benefits, etc., and ensure legal compliance.

General Information:

The currency of New Zealand is New Zealand Dollar (NZD).
Wellington is the capital of New Zealand
English and Maori are the languages of New Zealand. Documentation can be in English and Maori to be considered legally valid.
As of 2021, the of New Zealand was reported to be USD 249.89 billion.

The Ministry of Business, Innovation, and Employment of New Zealand handles all employment rules and norms.

Table of Contents

Select Section

Agreements
Onboarding Process
Visa
Minimum Wage
Payroll Cycle
Annual Bonus
Health Benefits
Working Hours and Overtime
Leaves
Social Security
Taxes for Employers
Taxes for Employees
Probation
Termination
Severance Pay
Employees or Contractors
Final Words

Agreements Onboarding Process Visa Minimum Wage Payroll Cycle Annual Bonus Health Benefits Working Hours and Overtime Leaves Social Security Taxes for Employers Taxes for Employees Probation Termination Severance Pay Employees or Contractors Final Words

Agreements

Agreements can be collective employment agreements or individual employment agreements.
Additional individual terms can be added to collective agreements.
The agreements must cover the nature of employment, compensation, payroll, notice period, severance pay, break time, etc.
All agreements must be in writing and in English, covering at least the basic terms.

Onboarding Process

In New Zealand, employers are required to have a detailed onboarding or induction program for new employees. Some of the requirements are -

Health and safety code briefing
Providing requisite training, material, and equipment for the job
Discuss all applicable in-house policies and rules
Get the required tax code declarations
Register the employee with Inland Revenue and other applicable departments
Ensure they are aware of other specifics such as timings, team, workplace comforts, etc.

Visa

Work Visa:

For a work visa, an applicant requires -
- A Job offer from an accredited New Zealand employer
- proof of character - police certificate from country of residence
- proof of the genuine intention of the visit
- New Zealand registration
- Other application documents
The following are a few of the different types of work visas in New Zealand.
- Accredited employer work visa - temporary; valid for up to 3 years (depends on salary)
- Specific purpose work visa - temporary; valid until the completion of the specific job
- Straight to residence visa - indefinite period
- Work to residence visa - indefinite period
- Talent work visa - up to 30 months; valid for exceptional talent in arts, culture, or sports.

Business Visitor Visa:

A New Zealand business visitor visa is valid for up to 3 months. Applicants require -

Proof of genuine intention of travel
Proof of good character
Letter from employer or company in New Zealand
Proof of Adequate finances
Employment proof
Air travel ticket (to and fro)
Other requisite application documents

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Minimum Wage

The wage in New Zealand (as of April 1, 2023) is NZD 22.70 per hour. For employees starting as freshers and those in training, it is NZD 18.16 per hour.

Payroll Cycle

The cycle in New Zealand can be weekly, bi-weekly (once in 2 weeks), or monthly. It has to be included in the employment agreements.

Annual Bonus

Although there is no mandatory bonus, some employers choose to provide an additional month's pay as an annual bonus.

Health Benefits

New Zealand has a high-quality public health care system that is subsidized for eligible persons. The government-funded institution covers all minor and major treatments and surgeries.
Employers may choose to provide additional private health insurance.

Working Hours and Overtime

Work hours: New Zealand has a typical work day of 8 hours and a 40-hour work week (spread over 5 days).
Break: Meal breaks must be for at least 30 minutes. Rest breaks of at least 10 minutes are also usually provided.
Overtime: Overtime compensation must be negotiated in the agreements. Employees may receive payment (equal to or greater than the minimum wage) or paid time off for overtime.

Leaves

Sick Leave

Employees are entitled to 10 days of paid sick leave. Employers may request proof of illness.

Parental leaves

Paid leaves are administered by the Inland Revenue.
Maternity leave: Up to 26 weeks of paid maternity leave is granted starting not earlier than 6 weeks before the due date. The employee must have worked for at least 6 months and may transfer the leave to the primary caregiver with valid reasons. Unpaid extended leave of up to 52 weeks (in total) can be taken by those who have worked for at least one year.
Paternity leave: Paternity or partner's leave can be taken for 1 (for employees working for at least 6 months) or 2 weeks (for employees working for at least 12 months).
Adoption leaves: If the employee is the 'primary caregiver', a paid parental leave of 26 weeks is to be granted. The employee must have worked for at least 6 months.

Annual leaves

Employees who have worked continuously for at least 12 months are entitled to four weeks of annual leave..

Other leaves

Bereavement leave - up to 6 days for the death of a spouse, child or a close relative or miscarriage or stillbirth.
Stress leave - leave taken due to work-related stress; considered with sick leave or another type of leave in the agreement
Leave without Pay (LWOP) - extended unpaid leave with the employer's permission
Defense Force Volunteer Leave - granted to those who are training or in active service in the Armed Forces.
General Election Voting leave - leave for general parliamentary election voting
Jury service leave - for employees who have jury service when called by the Ministry of Justice. Job security is provided to the employee.
Domestic violence leave - up to 10 days of paid leave upon six months of employment. Employers may request proof of violence.

Public Holidays (for the Calendar year 2024)

Some dates may vary based on official notifications and traditional calendars.

New Year's Day - 1st January
Day after New Year's Day - 2nd January
Waitangi Day - 6th February
Good Friday - 29th March
Easter Monday - 1st April
ANZAC Day - 25th April
King's Birthday - 3rd June
Matariki - 10th July
Labor Day - 28th October
Christmas Day - 25th December
Boxing Day - 26th December

Public Holidays (for the Calendar year 2025)

Some dates may vary based on official notifications and traditional calendars.

New Year's Day - 1st January
Day after New Year's Day - 2nd January
Waitangi Day - 6th February
Good Friday - 19th April
Easter Monday - 22nd April
ANZAC Day - 25th April
King's Birthday - 3rd June
Matariki - 1st July
Labor Day - 27th October
Christmas Day - 25th December
Boxing Day - 26th December

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Taxes for Employers

Employers are required to contribute to the following percentage of the employee's gross salary as payroll taxes -

KiwiSaver (Pension scheme) - 3%
Accident Compensation Corporation tax - 1% (for work-related accidents)

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Taxes for Employees

Income tax:

The following are the income tax brackets in New Zealand -

Up to NZD 14,000 - 10.5%
NZD 14,000 to NZD 48,000 - 17.5%
NZD 48,000 to NZD 70,000 - 30%
NZD 70,000 to NZD 180,000 - 33%
Above NZD 180,000 - 39%

Social Security tax:

KiwiSaver (Pension scheme) - 3% (employees can contribute higher rates)
Accident Compensation Corporation tax (ACC) - 1.39% (for non-work related accidents)

Probation

The probation period in New Zealand can be for up to 90 days. It should be mentioned in the employment agreement.

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Termination

Employment can be terminated for the following reasons -
- Resignation by the employee
- Continued unexplained absence of the employee
- Constructive dismissal
- Retirement of employee
- Dismissal by the employer due to misconduct or redundancy
The notice period must be specified in the employment agreement. Usually, a notice period of 2 to 4 weeks is observed. Payment instead of a notice period can be given if stipulated in the agreement or if mutually agreed upon.

Severance Pay

The severance or final pay must be included in the employment agreement. It includes pay for work until the last day, pay for holidays, and other negotiated payments.

Employees or Contractors

Employees and contractors are treated as different entities in New Zealand. Contractors are not covered in most employment-related laws in New Zealand.
Misclassifying the two would result in heavy fines for the employer.

Final Words

Being a popular global hub for talent, New Zealand is a lucrative destination for expanding business. Business and employee-friendly norms only add to its many advantages. EOR services take on employee payroll, benefits, etc. allowing businesses to focus on their goals.