Hire in New Zealand
Here’s where you get started with human resources best practices and hiring in New Zealand.
New Zealand Dollar (NZD)
Key Country Facts
New Zealand is a small country with a big heart. It has a unique history, a vibrant culture and there’s so much to do – much of it outdoors in its famously beautiful natural scenery.
New Zealand is an island country in the southwestern Pacific Ocean. It comprises two main landmasses—the North Island and the South Island with around 600 smaller islands.
In general, New Zealand has a mild climate, with winds coming in from the coast. The temperature tends to get colder as you head south.
New Zealand is a wealthy Pacific nation dominated by two cultural groups – New Zealanders of European descent, and the Maori, who are descendants of Polynesian settlers.
- No religion: around half of the population
- Christianity : below two-fifth
- Hinduism, Islam, Buddhism, Sikhism, Others: the rest
- English: Spoken by 96.1% of the population. Used in parliament, government, courts and education system.
- Maori: used by the natives, under Maori language Act 1987 it can be used for legal settings, but proceedings are recorded in English.
New Zealand HR at a Glance
New Zealand has laws that help keep workplaces fair. New Zealand law applied equally to migrants and New Zealand citizens and residents. Under New Zealand employment law, employers and employees both have rights and responsibilities. Employers must treat employees fairly, pay them at least the minimum wage set by the government, and meet their other employment law obligations. They must also make sure the workplace is safe. Employees must do their job competently and follow workplace health and safety rules. They must also stay within the conditions of their visa.
All employees must have a signed, written employment agreement with their employer. Even if employee has accepted a verbal offer for a job, he must sign a written agreement before he starts work. Employees can enter a collective employment agreement (negotiated by registered unions representing employees who are members of the union), or an employment contract.
A collective employment agreement is a document between an employer and their employees regarding employment conditions. Many large companies offer collective employment agreements that have been negotiated by a union. Employers must not unduly influence employees to join or not join a union. A new employee who is a union member can show they agree to the terms and conditions of an existing collective employment agreement by signing an offer of employment (but the collective agreement will apply even if they don’t). If the employee is covered by a collective employment agreement, they can also have additional individual terms. These should be set out in writing and signed by the employer and employee.
An individual employment contract is an agreement between an employer and employee that sets out terms and conditions of employment. A contract must be in writing. Employment contracts cannot provide for less than the minimum legal entitlements set out in the various legislations governing employment in New Zealand (which includes Employment Relations Act 2000, Holiday Act 2003, Wages Protection Act 1983, and Minimum Wage Act 1983 among others)
If applicable, other employment conditions such as parental leave and employment protection, equal pay, health and safety at work aspect, and protected disclosure if applicable.
Contract terms cannot provide for less than the minimum legal entitlements outlined in the legislation and collective employment agreements that may apply. All contracts must be in writing.
Probation Period / Trial Period
Probationary periods must be in the employment agreement and can be for any amount of time. During the probation period, employers must follow a fair process to give feedback, support and training throughout and give chance for the employee to improve. Employee may raise a personal grievance for dismissal if this process is not followed properly.
Employers with less than 20 employees can ask for a 90-day trial period from an employee, which needs to be written in the employment contract with a valid notice period. An employee cannot bring a personal grievance for unjustified dismissal or other legal proceedings about their dismissal as long as the employer has given the right amount of notice period (unless trial period is deemed invalid by the Employment Relations Authority). Employers do not need to give reasons for dismissal.
A probationary period cannot be applied after a trial period.
Agreed number of work hours must be in the employment agreement. Working hours cannot be more than 40 hours per week (not including overtime) unless employer and employee agree otherwise.
The hours that are agreed to in an employment agreement are generally the only hours that an employee needs to be present at work. Many employees receive payment if their employer asks them to work more than their normal hours.
Whether this overtime is factored into the employee’s salary, or will be paid at the employee’s normal rate of pay (at least the minimum wage rate) or a higher rate of pay, the arrangement needs to be agreed to by the employer and the employee. This should be put into the employment agreement so that both parties are clear.
If the specific hours aren’t put into a written agreement, then an accurate and timely written record will need to be kept of exactly what hours the employee has worked.
Bonuses are not required. However, many employers will offer bonus as an incentive and for retention purpose. Bonus differ based on industry and seniority.
Employers who want to dismiss an employee must: 1) act in good faith; 2) have a good reason; 3) follow a fair and reasonable process; and 4) have an open mind when dealing with problems so they ensure outcomes are not pre-determined. If the employer doesn’t follow above, the employee may be able to take a personal grievance claim against the employer. Reasons to dismiss an employee include: (i) serious misconduct (ii) repeated misconduct (iii) performance issues (iv) during a trial period (v) redundancy (vi) incompatibility and (vii) incapacity. There are general principles of fair process that employer must follow to justify (iii) and (i) and (ii).
To terminate an employee’s employment, employers must give a written notice of the last employment day or payment in lieu of notice. Serious misconduct warrants dismissal without notice. However, employers do have to pay all outstanding entitlements. Disputes by both employers and employees can be referred to the Employment Relations Authority (ERA).
When terminating an employee, a fair and reasonable notice must be given (except in case of serious misconduct) taking into the account the length of service; type of job; how long it would take to replace the employee; and common practice in the workplace. If there is no notice period in the employment agreement, depending on the role 2 to 4 weeks’ notice is often seen as fair. Employers can specify in employees’ collective employment agreements or employment contracts how much notice employees must give when they resign. Employers/employees can give notice usually in writing.
Just because an employment agreement contains a notice period doesn’t mean that the employer can dismiss the employee for any reason as long as they give the appropriate notice. The employer must still have a good reason and must follow a fair process.
An employer and employee can agree that the final pay will be made on the employee’s last day of work. Employees should receive their final pay on the pay day for their final period of employment at the latest. The final pay must include payment for all the hours worked since the last pay until the end of employment, annual holidays, public and alternative holidays owing, and any additional lump sum or other payments owing. These may be included in the employment agreement or negotiated as part of a leaving package. Any authorized deductions can be taken from the final pay. If an employee gives required notice the employer must pay the employee to the end of their notice period. If an employee gives less than agreed notice the employer only pays up to the last working day. Employer may also deduct pay in lieu of notice from any amount already owed to the employee.
There is no provision in New Zealand law for the suspension of an employment contract in times of plant closure or economic downturn. Unless there is a specific clause in an employment agreement giving a period of notice in a redundancy situation, ‘reasonable notice’ must be given. The length of ‘reasonable notice’ depends on a variety of factors, such as:
- the reason for the redundancy
- the employee’s length of service
- the employee’s seniority and/or remuneration package
- custom, practice and industry norms
- the employee’s ability to find alternative employment
- the amount of compensation being paid (if any).
Employers cannot make someone redundant without going through the workplace change process first. The process of redundancy, and payment of redundancy compensation (where this applies), are a last option. It should only happen after all redeployment options have been exhausted. The notice period must be at least the length of notice referred to in the employment agreement or workplace policies. If the employee agrees you may give an extended notice period while they continue in their role, or in a special project of some sort.
Whether employees receive redundancy payments is dependent on the applicable employment agreements and is a matter for negotiation between the parties. However, all employees whose employment is ending due to redundancy must be given notice in terms of the employment agreement. An employer can require an employee to work out their notice. A redundancy payment is taxable income.
According to the Fair Work Act, employers must keep time and wages records for 6 years. These need to be readily accessible to a Labor Inspector, legible and in English.
Trade Unions/Collective Agreements
Employees have total freedom over joining a union. It is illegal for employers to influence that decision. A trade union must have at least 15 members who are employees and must be organized for the purpose of supporting or advancing claims related to a proposed registered agreement. The largest trade union is the New Zealand Council of Trade Union (NZCTU or CTU). There are 360,000 workers in this union.
Fixed Term Contract
Fixed Term Contract (FTC) is regulated in New Zealand. There is no statutory limitations on the maximum number of successive FTCs. However, according to the ERA, the employer must have genuine reasons based on reasonable grounds for resorting to fixed term employment and must advise the employee of when or how his or her employment will end and provide the reasons justifying it.
According to 66 of the Employment Relations Authority (ERA), an employee and an employer may agree that the employment of the employee will end:
(a) at the close of a specified date or period; or
(b) on the occurrence of a specified event; or
(c) at the conclusion of a specified project.
Sec. 66(3) ERA provides that the following reasons are not genuine reasons:
(a) to exclude or limit the rights of the employee under the ERA;
(b) to establish the suitability of the employee for permanent employment;
(c) to exclude or limit the rights of an employee under the Holidays Act 2003.
Sometimes employees work in a triangular employment situation. This is where someone is employed by one employer but is working under another business or organization that tell them what they should do during their day-to-day work (controlling third party). It is ‘triangular’ because there are three parties to the arrangement, with each party having separate relationships with one another. The three parties are: the employer, employee, and the third party.
The Employment Relations (Triangular Employment) Amendment Act 2019 came into force on 28 June 2020, which addresses a gap in legislation in relation to employees in triangular employment situations (e.g. labour-for-hire). Employees are now able to apply to the ERA to add a ‘controlling third party’ (such as a ‘host’ employer in a labour hire arrangement) to a personal grievance claim. Employers can also apply to add a controlling third party to a personal grievance. The ERA will be able to divide responsibility for providing remedies between the responsible parties, reflecting the degree to which the employer and the controlling third party contributed to the personal grievance.
Tax and Social Security
Personal Income Tax
A person’s liability to New Zealand tax is determined by his residence status. A person can be a resident, non-resident, or transitional resident for New Zealand tax purposes. The New Zealand financial tax year runs from April 1st until March 31st the following year.
A tax resident of NZ refers to an individual who is in New Zealand for more than 183 days in any 12 month period or if one has a “permanent abode”, which is a dwelling place for one’s own use in New Zealand. The Permanent abode test is not clear cut and has many other factors to consider and dependant on case law. New Zealand taxes its residents on their worldwide income.
If an individual does not have a permanent place of abode in New Zealand, and he is away from New Zealand for more than 325 days in any 12-month period, he can become a non-resident for tax purposes. Non-residents are taxed on income from employment services in New Zealand. A non resident may be relieved from tax under a double tax agreement which NZ has with the country where one is a tax resident.
A transitional resident applies to new migrants or New Zealanders returning after at least 10 years and have never enjoyed the benefit of transitional status before. Transitional residents are exempt from tax on offshore investment income for 4 years to allow for strategic tax planning.
Both residents and non-residents are taxed using a tiered rate table as below. An Accident Compensation Corporation (ACC) earners’ Levy at the rate of 1.39% is also imposed on employment income up to a maximum of NZD 130,911 to fund the accident compensation scheme, for April 2020 to March 2021.
A non-resident withholding tax (NRWT) is imposed on every person who derives non-resident withholding income such as interests and dividends. The NRWT is generally a final tax. Interest is subject to 15% withholding tax while dividends are subject to 30% or 0% (depending on double tax agreements which New Zealand has with the source country).
New Zealand does not have a capital gains tax. There is the Fringe Benefits Tax (FBT) which is payable by employers when a fringe benefit (non-cash benefit) is provided to an employee or an associated person of the employee as a result of their employment relationship with the employer. The value of fringe benefits provided is not included in the gross income of employees.
Social security is largely non-contributory in New Zealand, and officially neither employers not employees make contributions. Unemployment and sickness benefits are available to all New Zealanders and permanent residents irrespective of their employment history, although there may be other eligibility criteria and means testing. They must, however, make contributions to the ACC scheme.
|Income Thresholds (NZ)||Tax Rate %|
|0 – 14,000||10.5|
|14,001 – 48,000||17.5|
|48,001 – 70,000||30|
|70,001 – 180,000||33|
WORKERS COMPENSATION INSURANCE
SUPERANNUATION CONTRIBUTION (KIWISAVER)
The employer is required to pay 3% of an employee’s salary to their KiwiSaver account. The rate of superannuation anyone is entitled to depends on a number of factors like marital status, living status and whether the employees lives with other people.
There is also the Employers Liability Insurance (EL) which is voluntary and does attract FBT. It is taken by employers and covers payment to employees if they are injured at work or become sick due to their work. It includes payments to employees to cover their wages while they’re not fit for work and medical expenses/rehabilitation and is in respect of injury in the course of work that is not covered by the ACC.
*The above rates serve as a broad guideline. Actual rates charged will differ.
Salary can be paid on a weekly, fortnightly or monthly basis. Employers need to pay employees their final payment on the last day of work, unless agreed otherwise in writing.
Pay slips are not compulsory in New Zealand. Pay slips can be electronic or hardcopy and contain details of payments, deductions, and superannuation contributions for each pay period.
- Full-time and part-time employees are entitled to four weeks of paid annual holidays after 12 months of continuous employment. Employees who have worked less than one year are not entitled to any annual leave, although employers may let them take some leave in advance. Employers can offer more annual leave than the minimum required by the National Employment Standards (NES).
- Employees can ask to cash-up up to one week of their annual holidays each year.
- Annual leave accumulates in hours and from the first day of employment, including the probation period. Unused annual leave will roll over from year to year and is paid out on termination of employment.
- Sick leave allow employees to take time off leave to care for a sick or injured spouse, partner, dependent child or any other dependent individual.
- This type of leave is funded by the employer. Access to sick leave applies after 6 months of continuous employment with the current employer, and an employee is entitled to 10 days of paid leave a year from 24th July 2021.
- Employer may request proof if employee is sick for three or more consecutive days, but the employer must agree to pay for the doctor’s fee.
- Any leave unused can be carried forward to the next year with the maximum capped at 20 days or more if the employer so chooses by way of the employment contract.
Compassionate & Bereavement Leave
- All employees are entitled to 3 days paid compassionate leave (bereavement leave) and can be taken if their partner, parent, child, sibling, grandparent, grandchild, or their partner’s parent dies. The entitlement is available after employee has been working continuously for six months and is entitled every 12 months.
- Employees are also entitled to one day on the death of a person outside their immediate family (depending on the circumstance).
- Employees can take the leave days in advance where mutually agreed to by the employee and the employer.
- Employers can request evidence such as a funeral/death notice or statutory declaration.
Family & Domestic Violence Leave
- Under the Domestic Violence – Victims’ Protection Act, employees are entitled to 10 days’ paid family and domestic violence leave each year, after working for six continuous months. Violent, threatening or other abusive behaviour by a close relative that aims to control an employee and causes harm or fear fall into family and domestic violence. It does not matter when the domestic violence took place. Employees have the rights even before they began working for their current employer.
- Employees may ask for short term flexible working arrangements which can be up to 2 months.
Maternity & Parental Leave
- Parental leave can be taken when an employee gives birth, an employee’s spouse or de facto partner gives birth, or when an employee adopts a child under 6 years of age.
- The employee who has worked for an employer for at least an average of 10 hours a week for 12 months or more just before the expected birth of the child, or the date they’ll take over the care of the child, is entitled to 26 weeks of government-funded paid parental leave and a further 26 weeks extended leave.
- Employees who have been working 10 hours a week for 6 months or more by the time of the baby’s expected delivery/adoption day are entitled to 26 weeks of government-funded paid parental leave (with a weekly cap) and 26 weeks unpaid parental leave.
- Working dads and partners, including same-sex partners, are entitled to 1 week if they have worked at least an average of 10 hours a week for 6 months and 2 weeks of unpaid leave if they have worked at least an average of 10 hours a week for 12 months.
- Pregnant employees can also take 10 days of unpaid special leave for things like doctor’s appointments and antenatal classes, before taking primary carer leave.
- Each employee can get a maximum of 11 public holidays a year.
- Employees get a paid day off on public holidays if it’s an otherwise working day for them. If they work on a public holiday, they’re paid time and a half, and may get an alternative day off.
- An employee is entitled to a public holiday only if the public holiday falls on a day that the employee would otherwise have worked (if the day hadn’t been a public holiday).
- Some public holidays are Mondayised (or Tuesdayised) if they fall on a Saturday or Sunday if those days were not days that an employee would otherwise work on.
- If an employee has had to work on a public holiday, an alternative holiday gives them a day off at another time. Some people call alternative holidays ‘lieu days’ or ‘days off in lieu’ but those terms can also refer to other types of leave, so it is recommended to call alternative holidays by their correct name.
- If an employee had to be on call on a public holiday and their activities had to be limited as a result, they are entitled to a full day’s paid alternate holiday regardless whether the employee had to end up working that day.
Community Service Leave
- Employees can take leave for voluntary emergency management activities and jury service, including attendance for jury selection and defence force volunteer work.
- Community service leave such as jury service is unpaid. There is no limit on the amount of community service leave employees can take, but employers may apply for the employee to be excused from such duties due to special commitments at the workplace.
- Employers do not have to pay employees while they do jury service, but many choose to ‘top up’ the money the employee gets from the Ministry of Justice so that they get their normal pay.
Flexible Working Arrangement
Under part 6AA of the Employment Relations Act 2000, all employees have the right to request a variation of their working arrangements at any time. Employers have an obligation to respond to requests as soon as possible and not later than 1 month after receiving the request. There is a limited, but broad, number of reasons employers can decline a request, such as an inability to recruit additional staff or to reorganize work.
Flexible work” covers a wide range of arrangements outside the traditional working week. And can be tailored to suit each employee’s needs. Common examples include:
- working a different number of hours, e.g., part-time
- working within different time frames, e.g., starting and finishing early
- working remotely
- purchasing additional leave
- taking additional unpaid leave
Other Types of Leave
Other types of leave include garden leave, long service leave, voting leave, jury service, defense forces leave, and leave options for workplace stress or following a natural disaster
Benefits to the Employee in New Zealand
Eligibility rules for joining KiwiSaver state individuals must be New Zealand or Australian citizens or hold either a New Zealand or Australian residence visa, and live (or normally live) in New Zealand and be below the age of eligibility for NZ Super (currently 65).
You cannot join KiwiSaver if you have a temporary, visitor, work or student visa. Australian citizens can join KiwiSaver.
The minimum leave entitlement is 4 weeks paid leave after 12 months of continuous employment with an employer. An employment contract can provide other leave entitlements. However, they cannot be less than what the minimum stated by the law. Statutory leave includes but is not limited to annual leave, sick a leave, bereavement leave and public holidays. There are no mandatory statutory benefits other than leave entitlements in NZ.
- Using a work car for private purposes,
- Gym membership,
- Discounted loan,
- Entertainment, such as tickets to concerts,
- Medical insurance, etc.
EXPATRIATES – ACCOMMODATION
If you want to know how to rent a house or an apartment, keep in mind that you might have a hard time finding furnished rentals. That is because most furnished options on the market are studios or one-bedroom places, which are typically taken by students.
Paying weekly rent is common in New Zealand. You should also know that you will have to pay for all the expenses that result from living in the accommodation unless you agree otherwise with your landlord.
There are two types of tenancies in New Zealand:
- Fixed-term tenancy: typical rental contract with a fixed start and end date.
- Periodic tenancy: flexible agreement that ends when either the tenant or the landlord wishes to give notice.
Once the fixed-term ends, the tenancy becomes periodic. As mentioned, the periodic tenancy has no end date. Usually, tenants must give 21 days’ notice in writing, while the landlord is expected to give a 90 days’ notice if they wish to terminate the tenancy. It is also possible to have a short fixed-term tenancy, which consists of a 90-day period or less. This type of tenancy does not become periodic after it ends.
Visas and Foreign Workers
Foreigners and expatriates who wish to live and work legally in New Zealand are required to obtain a valid visa issued by the Department of Immigration. There are several categories of work visas for different professions, including investors, experience businesspeople, skilled professionals, specialized workers, and short-term trainees. For foreign companies looking to expand to New Zealand, your employees will most likely fit the skilled-professionals category and can apply for any of the following:
Essentials Skills Work Visa
The Essential Skills Work visa is for skilled workers whose job is listed on the Essential Skills in Demand List. It allows you to work in the country for up to five years, but the duration may depend on your skill level. For a foreigner to fill a job position with this visa, the employer must prove that they could not hire a New Zealander.
Specific Purpose Work Visa
You can apply for a Specific Purpose Work Visa if you are coming to New Zealand for a specific purpose or event.
Supplementary Seasonal Visa
Supplementary Seasonal Employers can recruit temporary visa holders already in New Zealand to plant, maintain, harvest or pack crops when there are not enough New Zealanders available to do the work.
Long Term Skills Shortage Visa
Your qualifications, skills, and experience will fall on one of five categories defined by the Australian and New Zealand Standard Classification of Occupations (ANZSCO).
Temporary Work Visa
The Temporary Work Visa can be obtained by those who have a confirmed job offer from New Zealand employer and are visiting New Zealand for an event or for a specified purpose with Intend to accumulate work experience, or to join a business partner in New Zealand and continue professional/business duties.
Every work visa has its own requirements, with some based on an immigration point system. Employees may need different visa depending on the type of work and the assignment period. The general requirements include:
Meeting health and character requirements,
Demonstrating competent English,
If your visa is subject to a points scale, you can typically find a simulation on the immigration website that allows you to test if you meet the required points to apply. Keep in mind that only an immigration officer can award you points during the assessment of your visa.
It is important to know that all work visas in New Zealand are temporary, even the specific visas that can lead to a permanent residence which are covered further in this guide. When talking about a temporary work visa in New Zealand that means these types of visas are not geared towards getting permanent residence.
GETTING A TAX NUMBER
Once the visa has been granted, the employee should get a tax file number (IRD number) – a personal reference number in the New Zealand tax system.
Public Holidays in 2022
|1||New Year’s Day||January 1st|
|2||Day after New Year’s Day*||January 2nd|
|3||Waitangi Day*||February 6th|
|4||Good Friday||April 15th|
|5||Easter Monday||April 18th|
|6||Anzac Day||April 25th|
|7||Queen’s Birthday||June 6th|
|9||Labour Day||October 24th|
|10||Christmas Day*||December 25th|
|11||Boxing Day||December 26th|
The list above is New Zealand’s public holidays. Each region has different public holidays.
*For holidays that fall on a Sunday, the next day will be a holiday.