Payroll and Benefits Guide New Zealand
Last updated: May 10, 2023
Employer Payroll Contributions
|4.00%||Total Employment Cost|
|1.00% of gross salary +KiwiSaver Contribution||Accident Compensation Corporation|
Employee Payroll Contributions
|1.39%||Total Employee Cost|
|1.39%||Accident Compensation Corporation|
|Optional Contribution||KiwiSaver (Pension)|
Employee Income Tax
|10.5%||0.00 – 14,000 NZD|
|17.5%||14,001 NZD – 48,000 NZD|
|30.0%||48,001 NZD – 70,000 NZD|
|33.0%||70,001 NZD – 180,000 NZD|
|39.0%||180,000 NZD +|
The minimum wage in New Zealand is currently set at NZD 22.70 per hour.
A new wage threshold for migrant employees came into effect on 27 February 2023, to match the current national median wage of NZD 27.76. This applies to those in the Accredited Employer Work Visa (AEWC), residence visa categories and green list occupations.
MINIMUM WAGE (PER MONTH)
Payroll frequency is the employer’s choice; however, common frequencies are monthly or bi-weekly (every two weeks).
In New Zealand, there is no legal requirement for 13th-month payments.
New Zealand does not have a minimum requirement. Common full-time hours are 7.5 hours to 8.0 hours per day. The number of hours worked by an employee, whether more or less than 40 hours a week, must be included in the employment contract.
Payment for overtime must be stipulated in the employment contract, or it may be prescribed in company policy.
Paid Time Off
Employees are entitled to a paid annual leave entitlement of four weeks following a year of service. Unused leave will be compensated in the case of an employee’s termination.
Unused leave is carried over. Fixed-term workers contracted for less than 12 months receive 8% holiday pay instead of four weeks’ leave.
Holidays falling on weekends are moved to the next business day as a day off in lieu.
* From 2022, New Zealand will recognize an additional public holiday – Matariki. This will be recognized on Friday 24 June 2022, and will be a statutory day off for employees. The calendar date for the holiday will shift each year to align with the Māori lunar calendar but will always be a Friday.
The New Zealand Parliament passed the Holidays Amendment Bill to increase the minimum employee sick leave entitlement from five to 10 days per annum, after six months of continuous employment with their employer.
Employees are only able to carry over 10 unused sick days each year to add to their annual entitlement up to a maximum of 20 days of current entitlement in any year. This applies to full-time, part-time, and fixed-term employees, where that fixed term is longer than six months.
A casual employee will also be entitled to sick leave where they have six months’ current continuous employment with the same employer, or they have worked for the employer for six months for an average of 10 hours per week, and at least one hour every week or 40 hours in every month. Sick leave is not to be pro-rated in any way.
In New Zealand, maternity leave is known as primary carer leave and is available to:
Female employees who are having a baby, their spouse or partner, and employees who are going to have the primary responsibility for the care, development, and upbringing of a child under six years permanently; this may for example be through adoption, but it does not include foster care or other temporary care basis. If the employee has a spouse or partner, they may choose who will be the primary carer.
Pregnant employees are entitled to 26 weeks of primary care leave and are paid their regular weekly salary up to a maximum of 661.12 NZD (from 1/7/2022 to 30/6/2023).
Primary carer leave starts on the due date, or the child’s birth if the child is born to the employee. In any other case, primary carer leave starts when the employee becomes the primary carer in respect of the child. The employee can start their primary carer leave up to six weeks (or earlier with the employer’s consent) before the baby’s due date or when the employee will become the child’s primary carer.
PAID MATERNITY LEAVE (DAYS)
Paternity leave is known as partners leave in New Zealand and entitles partners to leave starting 21 days before the due date of the baby, or the date employee’s partner or spouse becomes the primary carer for a child under six years and ending 21 days after the baby is born.
The exception is if the baby is discharged from a hospital more than 21 days after the birth, in which case the partner’s leave timeframe ends on the day the child is discharged) or the date the employee’s partner or spouse becomes the primary carer for the child.
There is a range of Parental leave options in New Zealand for:
- Special leave — unpaid leave for pregnancy-related appointments
- Primary carer leave
- Extended leave
- Spouse or partner’s leave
- Negotiated carer leave — if you’re not eligible for work leave
Depending on the collective agreement/employment contract terms, an employee may be allowed additional leave types, on approval between the employer and employee, for the following:
- Special Leave-10 days of unpaid leave, which is given to employees 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. An employee may be entitled to 52 extra weeks of leave if they have been employed for at least 12 months, and 26 weeks is given to a parent who has been employed for at least six months.
The termination process varies according to the terms of the employment agreement and collective agreement in place and will depend upon the type of contract and reason for termination. An employer must provide sufficient notice before terminating the employment contract except for the case of gross misconduct.
An employee wishing to terminate their employment must provide sufficient notice. The amount of which will be outlined in the employment agreement and is typically of a duration between two and four weeks.
If there’s no specific clause in the employment agreement then ‘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)
Generally, severance pay is not required unless it is a redundancy scenario.
The statutory (trial period) probation period in New Zealand begins on the first day at work and can be for up to 180 days. The actual timeframe will be stipulated in the employment contract and is only applicable to employees who have not worked for the employer before. Three to six months is a common period to use as probation.
- Mileage and travel allowances/reimbursements
- Phone allowances
- Wellness allowances
- Parking allowances
A foreigner can apply for a work visa when there is:
- A job offer from a New Zealand employer
- A specific work-related purpose or event
- A country that has a particular work scheme
- A person has been studying in New Zealand
Some work visas can also lead to residence — that is, the right to live, study and work indefinitely.
To apply, there are required skills, experience, and qualifications needed for the New Zealand workforce.
Types of New Zealand work visas include:
- Essential skills work Visa – Temporary work visa that allows employment from one-five years.
- Work-to-residence Visas – Temporary visa options that allow employees who work full-time for two years to receive residence status.
- Working holiday Visas – Allows for work and travel from 12 – 23 months. These visa schemes depend upon your country of origin.
- Specific purpose Visa – Visa for employees meant to complete a particular task. These Visas typically last 3-12 months, with sometimes three-year visas being granted to multinational employees.
- Relocating business Visa – Used if the company or employer is relocating to New Zealand.
In addition, with effect from 1st November 2021, all New Zealand employers who hire migrant employees will have to be accredited.
The standard rate of GST in New Zealand is 15.00%.
Stay up to date on payroll & employment law changes
Income Tax: New bracket of 39% tax on income above NZD 180,000
Questions & Answers
Payroll and Benefits Guide
in New Zealand
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
Public Holidays Calendar
|Sunday||Jan-1||New Year's Day|
|Monday||Jan-2||Day after New Year’s Day|
|Tuesday||Jan-3||Day in Lieu of New Year's Day|
|Monday||Apr-10||Easter Monday||Substitute holiday given|
|Monday||Dec-25||Christmas Day||No Holiday given|
|Tuesday||Dec-26||Boxing Day||No Holiday given|