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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
- 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
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal 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 2023)
- New Year's Day (1 January)
- Day after New Year's Day (2 January)
- Waitangi Day (6 February)
- Good Friday (7 April)
- Easter Monday (10 April)
- ANZAC Day (25 April)
- King's birthday (5 June)
- Matariki (14 July)
- Labor Day (23 October)
- Christmas Day (25 December)
- Boxing Day (26 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.
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