Located in the Southern Hemisphere, the picturesque beauty of New Zealand is enticing to all. However, there is more to New Zealand than its heavenly landscapes.
With a labor force encompassing 2.82 million individuals, the country is a rising business force in the global economy. Its high-income economy generated a GDP of 252 billion USD in 2023, making New Zealand the 52nd-largest national economy in the world. Furthermore, the country ranks 1 in the World Bank’s Ease of Doing Business Report 2020, further highlighting why businesses from all over are interested in the New Zealand market.
Therefore, if you are also looking to hire in New Zealand, you must first be aware of the relevant regulations in the country.
Labor Laws in New Zealand
To hire in New Zealand, one must be aware of the following operating labor laws in the country.
Conditions of Service
- The Employment Relations Act 2000 forms the legal backdrop for all employer-employee relations in the country.
- It helps enforce employment standards, promotes fair processes, governs personal grievances, and so on.
- The standard working hours in New Zealand is 40 working hours per work week.
- Work weeks last five days, typically beginning on a Monday and ending on a Friday.
- The Equal Pay Act 1972 upholds the need for gender equality by preventing pay disparities due to an employee's gender.
- The Human Rights Act of 1993 ensures that employees are treated equally, without discrimination based on race, age, or gender.
- The Minimum Wage Act of 1983 provides the basis for setting minimum wages in the country.
- The minimum wage in New Zealand undergoes annual reviews and forms the basis for the 40-hour workweek duration.
- Moreover, the Wages Protection Act 1983 provides security to employee wages. It helps control deductions from wages, prevent employment premiums, and stop employers from controlling how their employees spend their wages.
Health and Safety
Data Privacy and Security
- The Privacy Act 2020 governs the laws about an employer collecting, storing, and using an employee’s personal information.
- It also oversees an employee accessing or requesting to correct their personal information.
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Payroll and Taxes in New Zealand
Here are the tax and payroll in New Zealand that an employer must follow to prevent penalties:
- As of 2023, the minimum wage in New Zealand is set to 22.7 NZD per hour.
- This minimum wage is reviewed and updated once every year.
- There is no legal framework that requires employers to pay more than an employee’s salary for any overtime hours.
- However, employers can negotiate overtime pay with the employee depending on the requirement.
Employer and Employee Contributions
- Both employees and employers are required to contribute to the KiwiSaver, a retirement savings scheme, and ACC, a national fund that covers the costs of work-related injuries.
- In New Zealand, there is a progressive scheme of employee taxation, with tax rates increasing along with increasing income.
- The tax bracket in New Zealand starts at 10.5% and ends at 39%.
- The corporate income tax rate is 28%.
Dates of Taxation
- Taxpayers in New Zealand must pay their taxes by the end of the tax year, which lasts from 1st April to 31st March.
- Businesses can appeal to the Inland Revenue Department to modify this date.
New Zealand has several kinds of taxation forms that must be duly filled in and submitted by employers and employees accordingly. For instance, the IR3 form is for those wanting to file their tax returns. You can find more information here.
Employee Benefits in New Zealand
New Zealand's labor laws comprehensively outline employee benefits, emphasizing their implementation for a positive workspace.
Leave Policy in New Zealand
The following comes under leave policy in New Zealand:
Paid Time Off:
- As per the employment laws in New Zealand, for every 12 months of employment with the same employer, employees benefit from 4 weeks of paid time off.
Public Holidays: The following 12 public holidays are recognized in New Zealand:
- A public holiday is usually observed on the next day if it falls on a weekend.
- Employees who work on these public holidays are eligible for 150% of their salary.
- New mothers, also called primary carers, get 26 weeks of paid Maternity leave in New Zealand.
- Female employees can take ten days of leave without pay for pregnancy-related reasons, including midwife appointments, prenatal checkups, etc.
- Paternity leave is referred to as the Partner’s Leave in New Zealand. It has the following criteria:
- One week of unpaid leave for six months of continuous employment.
- Two weeks of unpaid leave for 12 months of continuous employment.
- Both parents are entitled to a paid leave of 3 days in the case of miscarriage or stillbirth.
- Employees, with at least six months of continuous employment, are entitled to ten days of paid sick leave each year.
Bereavement and Compassionate Leave:
- Employees can take up to 3 days of paid bereavement leave if they have worked for the same employer for at least six months.
- Employees are also granted one day of paid compassionate leave for the death of a friend or distant relative.
- Both employers and employees contribute to KiwiSaver, which is a national work-based pension fund in New Zealand.
- Employers and employees have to contribute ranging from 3% to 10%.
- Additionally, New Zealand Superannuation, a public pension system, pays pension to all eligible individuals aged 65.
- If an employee is injured at work, the employer must pay them 80% of their usual weekly earnings for the first week. The employer can't make the employee use their paid sick leave during that week.
- Several companies have various training programs to ensure their employees' overall wellness.
- The New Zealand’s Department of Health is responsible for paying benefits to those whose disabilities impact their ability to work.
- The standard probation period in New Zealand is three months. However, there is no legal limit on probationary periods in the country. Hence, the duration can vary from company to company.
- The employment laws in New Zealand do not mention any minimum notice period to be followed by employees. In general, two weeks is considered to be an appropriate duration.
Cost of Hiring an Employee in New Zealand
To hire in New Zealand, you must first understand its costs. Overall, the cost of hiring in New Zealand varies greatly depending on whether companies hire through an employer of record like Skuad or by establishing a subsidiary. Hiring in New Zealand is also affected by:
- Training Costs
- Retention Costs
- Employee Benefits
Establishing a Subsidiary vs. Employer of Record (EOR) in New Zealand
Essentially, establishing a subsidiary in New Zealand can offer increased control and a physical presence, but it also entails substantial expenses, both in financial terms and management commitment. Conversely, choosing Skuad as your Employer of Record in New Zealand can reduce hiring costs while ensuring compliance, making it an appealing choice for numerous global companies.
Top Job Listing Sites in New Zealand
- Seek: This is the most popular job posting website in the country, where companies can pay to list their vacancies and attract eligible and qualified candidates.
- Careers.govt.nz: This website, operated by New Zealand’s Tertiary Education Commission, provides free posting facilities to employers.
- Trademe: Visited 1.9 million times every day, Trademe has tons of job listings inviting talented individuals to its portal.
- Indeed: This is the world’s largest job posting site and, hence, quite popular in New Zealand, as well. This website has provisions for both free and paid job postings.
- Snaphunt: This is a global hiring platform that allows free job postings. Employers can use filters such as timezone, country, region, and so on, to seek out candidates.
Compliance Risks of Hiring Employees in New Zealand
Navigating the hiring laws in New Zealand can be tough for international businesses. However, failure to comply with such laws can lead to strict punishments.
If the employer is an individual, failing to comply with New Zealand employment laws can lead to a penalty of $10,000. On the other hand, for corporate bodies, the penalty can be as high as $20,000. Furthermore, repeated offenses can incur even higher penalties.
How to Hire Talent in New Zealand
You can adopt one of the following ways to hire in New Zealand:
Option 1: Establishing a Subsidiary
- You can establish a subsidiary to hire employees in New Zealand. This will give you greater control over your company's hiring and operation processes.
- However, you must invest a lot of money, time, and other resources if you choose this option.
Option 2: Hiring On A Contractual Basis
- Instead of opting for full-time employees, you can hire individuals on a contractual basis to save costs and allow flexibility.
- If you choose this option, ensure your contracts comply with all local laws to avoid expensive penalties.
Option 3: Hire an Employer of Record (EOR)- Skuad
- You can partner with an EOR like Skuad to hire employees in New Zealand on your behalf.
- Skuad simplifies hiring, payroll management, tax payments, compliance, and other operations for you.
Hiring Trends in New Zealand in 2024
With every changing year, hiring trends in New Zealand are also witnessing marked differences, based on the country’s needs. One of the biggest noticeable changes is the rise of hybrid work models. This has led to companies looking for employees who can manage both work from the office and home and are comfortable with technology. On the other hand, employees seek job opportunities that allow more flexibility in terms of work hours, projects, etc.
Additionally, companies are more interested in candidates with the right abilities than in simply work experience. Hence, businesses are adapting new assessment methods to diversify their talent pools without resorting to old hiring practices that focus solely on industry experience and years of work.
Hiring in New Zealand Made Simpler with Skuad
Most businessmen and managers these days are interested in growing their businesses beyond the borders of their origin countries. However, the process of hiring in a foreign nation is time-consuming. This is where Skuad can help you.
Skuad offers a global employment and payroll platform where you can easily onboard, pay and manage contractors and employees in New Zealand. In addition to that, Skuad will also provide you with the perfect framework to comply with the country’s laws, stay on top of all critical aspects of managing employees, and much more. Book a demo with Skuad today.
1. How to hire staff in NZ?
Employers can hire in New Zealand by following one of the three options -
- Establishing a subsidiary
- Hiring contractors
- Partnering with Employer of Record (EOR) like Skuad
2. How much does it cost to recruit a new employee in New Zealand?
The cost of hiring in New Zealand varies depending upon the process employers opt to follow during the hiring process. On a larger scale, it mainly includes payroll costs, employee benefits, training costs, and others.
3. How do I employ an overseas worker in New Zealand?
You can start by checking the eligibility of the candidate and verifying if they have an appropriate visa or work visa. Once the job offer is made, apply for a work visa via Immigration New Zealand and get it approved. Then, draft an employment agreement, comply with New Zealand tax laws and provide an RID number for tax purposes.