Guide to employment, payroll and benefits in

New Zealand

Rivermate offers complete payroll, benefits and compliance services for

New Zealand

01. Overview

Last updated: 

August 19, 2021

Currency
New Zealand Dollar
Capital
Wellington
Ease of doing business
86.8
Language
English
Population
4822233
GDP growth
3.03%

02. Grow your team in

New Zealand

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

New Zealand

, particularly if you don't have established local relationships. You can hire employees in

New Zealand

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

New Zealand is an island nation in the Pacific Ocean's southwest corner. It is made up of two major landmasses, the North and South Islands, as well as over 700 smaller islands, comprising a total area of 268,021 square kilometers. New Zealand is about 2,000 kilometers east of Australia and 1,000 kilometers south of the islands of New Caledonia, Fiji, and Tonga across the Tasman Sea. Tectonic uplift and volcanic eruptions are responsible for the country's varied topography and sharp mountain peaks, including the Southern Alps. Wellington is the capital of New Zealand, and Auckland is the most populous city. The islands of New Zealand were the last large inhabited lands to be populated by humans due to their remoteness. Polynesians started to settle in the islands around 1280 and established a distinct Mori community around 1350. Abel Tasman, a Dutch explorer, was the first European to see New Zealand in 1642. The Treaty of Waitangi was signed in 1840 by representatives of the United Kingdom and Mori chiefs, establishing British control over the islands. New Zealand became a colony of the British Empire in 1841, and then a dominion in 1907. It achieved full statutory independence in 1947, but the British king remained in control. The indigenous Mori are the largest minority, followed by Asians and Pacific Islanders, who make up the bulk of New Zealand's population of 5 million people. New Zealand's culture is largely derived from Mori and early British settlers, with recent broadening due to increased immigration reflecting this. English, Mori, and New Zealand Sign Language are the official languages, with English being the most widely spoken. New Zealand is a developing country that performs well in international comparisons of national success in areas such as quality of life, education, civil rights security, government accountability, and economic freedom. During the 1980s, New Zealand's economy underwent significant changes, transforming it from a protectionist to a liberalized free-trade economy. The service sector, followed by the manufacturing sector and agriculture, dominates the national economy; foreign tourism is a major source of revenue. On a national level, legislative power is vested in an elected, unicameral Parliament, while executive political power is exercised by the Cabinet, which is currently headed by Prime Minister Jacinda Ardern. The country's leader, Queen Elizabeth II, is served by a governor-general, officially Dame Patsy Reddy. In addition, for local government purposes, New Zealand is divided into 11 provincial councils and 67 municipal authorities. Tokelau, the Cook Islands, and Niue are all part of New Zealand's Realm, as is the Ross Dependency, which is New Zealand's claim to Antarctica.

04. Public holidays

05. Types of leave

Paid time off

Almost every employee is entitled to at least four weeks of paid vacation every year. Casual employees, on the other hand, receive 8% holiday pay instead of 4 weeks annual vacation per pay period.In the event of termination, unused leave is refunded.

Public holidays

New Zealand recognizes ten public holidays.

Sick days

After the first six months of continuous work, employees are entitled to a minimum of five days paid sick leave every year, with an extra five days paid sick leave after each following 12-month period. The employer is responsible for this.There is no method to prorate sick leave entitlements. Part-time employees, like full-time employees, are entitled to five days of sick leave each year.Sick leave owed at the time of termination is not reimbursed.

Maternity leave

Mothers are entitled to 26 weeks of maternity leave, known as primary care leave, and are paid between $177.00 and $585.80 a week before tax by the government.Mothers who have a miscarriage or a stillbirth are entitled to three days of paid time off.

Paternity leave

After six months of working, a spouse or partner is entitled to one week of unpaid leave, and after 12 months of employment, two weeks of unpaid leave. Leave can be taken at any time during the 21-day period preceding or after the delivery.Fathers who lose a child due to miscarriage or stillbirth are entitled to three days of paid leave.

Parental leave

Parental leave in New Zealand includes primary care leave, special leave, partners leave, extended leave, and negotiated career leave, and it covers both maternity and paternity leave.Parents who lose a child due to miscarriage or stillbirth are entitled to three days of paid vacation.

Other leave

Special Leave-10 days of unpaid leave are given for pregnancy-related appointments.Extended Leave – This is extended unpaid leave given to parents and depends on the amount of time an employee has worked. 52 extra weeks can be taken for a parent who has been employed for at least 12 months, and 26 weeks is given to a parent who has been employed for at least 6 months.

06. Employment termination

Termination process

When an employer intends to terminate an employee's employment, the employer must notify the employee in advance (unless the employer is going to dismiss the employee without notice for serious misconduct).


Simply because an employment agreement specifies a notice period does not mean that the employer has the right to terminate the employee for any reason as long as the employee receives the required notice. Employers must still have a legitimate reason and follow a fair procedure. This also applies to fixed-term contracts.

Notice period

An employee must notify their employer in advance of their intention to resign (generally outlined in the employment agreement). Depending on the role, two to four weeks' notice is frequently considered reasonable. Concerning notice of redundancy, if an employment agreement does not contain a specific clause providing for a period of notice in a redundancy situation,'reasonable notice' must be provided. The duration of 'reasonable notice' is determined by a number of factors, including the reason for the redundancy, the employee's length of service, the employee's seniority and/or remuneration package, custom, practice, and industry standards, the employee's ability to find alternative employment, and the amount of compensation paid (if any).

Severance pay

Severance pay is calculated on the basis of hours worked up to the final day of employment, as well as any unused annual leave or days in lieu payments. Additional payments are negotiated as part of the leaving package or specified in the employment agreement. If an employee does not receive all components of his or her payment, he or she may file a claim for unpaid salary or other violations of the employment agreement.

Probation period

Only employers with fewer than 19 employees (on the day the employment agreement is entered into) may employ a new employee on a trial basis for the first 90 calendar days of their employment. A valid trial period must be agreed upon in the employment agreement prior to the employee commencing work, or the trial period will be null and void. A trial period must include a valid notice period in the employment contract, be applicable to any industry and job, and be agreed upon in good faith by the employer and employee. In other words, an employee cannot be forced to work on a trial period. Employers can use a probation period to evaluate the skills of a new employee or a current employee transitioning to a new position. Probation periods may be of any length (the standard is approximately three to six months), but the duration must be specified in the employment agreement.

07. Working hours

General

In New Zealand, there are no legal restrictions on working hours. The traditional workweek is 40 hours, Monday through Friday, from 8:30 a.m. to 5 p.m., with a half-hour lunch break.

Overtime

Generally, the hours agreed upon in an employment agreement are the only hours during which an employee must be present at work. Overtime hours and compensation should be negotiated as part of the employment agreement.


Numerous employees receive compensation if their employer requires them to work beyond their normal hours. However, there is no legal requirement that overtime pay be greater than the regular salary.

08. Minimum wage

General

New Zealand has different minimum wages for adults, starting-out employees, and employees on training. Employees ages 16 and older qualify for the adult minimum wage, which is NZ$20.00 an hour before tax. The starting-out wage is NZ$16.00 an hour before tax and covers 16 and 17-year-olds working for one employer fewer than six months; 18 and 19-year-olds who meet certain specifications; and 16 to 19-year-olds with an employment agreement requiring 40 credits of industry training a year.


The minimum wage for training workers is NZ$16.00 an hour. To qualify as a training worker, the employee needs to be 20 years old or older and have an employment agreement that stipulates at least 60 credits of industry training a year.

09. Employee benefits

General

In New Zealand, there is both public and private healthcare. Many companies provide health insurance as a perk or as an option.

Employees in New Zealand are entitled to a minimum of four weeks of annual leave, with the option of exchanging one week for cash. In addition, the nation has 11 official holidays on which workers are promised a day off. Although you may negotiate additional vacation days, you must keep this statutory minimum in mind when developing your New Zealand benefit management strategy.

Working parents are likewise entitled to maternity and paternity leave. Paid parental leave will be extended to 26 weeks beginning in July 2020. Employees with children may also utilize their sick leave entitlement, known as domestic leave, to care for their ill children or another dependent family member.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

New Zealand

to hire a team takes time, money, and effort. The labor law in

New Zealand

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

New Zealand

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

New Zealand

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

New Zealand

via our Employer of Record / PEO solution.

Ready to get started? Our friendly staff is ready to assist you with all your questions, let's connect.