New Zealand is one of the most prosperous countries in the Asia-Pacific region with a sizable service sector that contributes nearly 65% to the GDP. The country’s major manufacturing industries include food processing, aluminum production, metal fabrication, and wood/paper products. The government’s strong commitment to economic freedom has resulted in openness to global trade. Other major strengths of the country’s economy include a high level of monetary stability, sound management of public finance, and strong protection of property rights.
Currency: New Zealand Dollar
Principal Languages: English, Maori, New Zealand Sign Language
Government: Constitutional Monarchy with a Parliamentary System of Government
Capital City: Wellington
Major Cities: Auckland, Christchurch, Hamilton, Dunedin
There are two categories of employment agreements in New Zealand under the Employment Relations Act 2000, namely individual and collective. All agreements (individual or collective) must include the following details:
- Information related to an employee’s entitlements under the Holidays Act 2003
- The employees’ protection provision stating how workers will be affected in case of restructuring
- Entitlement to 1.5 times the regular pay for work done on a public holiday
- Work-related problem resolution process.
The regular work schedule comprises 40 hours and 5 working days in a week unless negotiated otherwise in the employment agreement. Amendments made to the Employment Relations Act in 2015 have made the requirements of rest periods more practical for employers. Employers can do away with breaks if their situation makes it implausible to give breaks or employees receive adequate compensation.
It is not mandatory to provide overtime pay but it must be if specified in employment agreements. Employers and employees can agree on the hourly overtime rates for any work done beyond the regular weekly work schedule of 40 hours.
The following national holidays are observed in New Zealand:
- Jan. 1-2: New Year's
- Feb. 6: Waitangi Day
- April 25: ANZAC Day
- Good Friday and Easter Monday
- Queen's Birthday (first Monday in June)
- Labor Day (fourth Monday in October)
- Dec. 25: Christmas Day
- Dec. 26: Boxing Day
- Provincial Anniversary Day (date determined locally)
If Waitangi Day, Christmas, Boxing Day, New Years’ Day, ANZAC Day, and Jan. 2 falls on a Saturday or Sunday, they are observed on the following workday.
Employees are entitled to 4 weeks’ leave in a year. The leave can be taken at the time agreed between the employee and the employer. Employees can take 2 consecutive weeks of leave out of the 4 weeks.
Under the Holidays Act 2003, employees are entitled to 5 days’ sick leave in a year after 6 months of employment. Unused sick leave can be accrued for up to 20 days, and it is not mandatory to pay compensation upon termination of employment. In case an employee receives Accident Compensation Corporation (ACC) or workers' compensation payments for more than 5 days, both employers and employees are allowed to increase the ACC payment from 80% to 100% by reducing 1 day from employees’ sick leave balance.
Women employees, under the Parental Leave and Employment Protection Act 1987, are entitled to 52 weeks’ maternity leave. To qualify, employees must have worked an average of 10 hours in a week or 40 hours in a month.
Spouses or partners of employees having a baby are entitled to 52 weeks’ paternity leave. Mostly, employees are entitled to return to their positions at the end of the parental leave. Employers may prefer employees who hold key positions for similar jobs after 6 months. However, reinstating in the earlier position cannot be guaranteed.
The government pays a maximum of NZ$527.72 per week as parental leave benefit for up to 18 weeks.
Spouses or partners who take the responsibility of nursing or caring a child aged less than 6 years with an intention to adopt are entitled to same parental leave benefits as biological mothers.
Employees are entitled to 3 days’ bereavement leave upon the death of a close family member including their parents, spouses, children, grandparents, mother or father-in-law. In case of more than 1 death, employees are entitled to an additional 3 days’ bereavement leave in a month.
Volunteer Defense Force Leave
Employees who volunteer in the armed forces are entitled to unpaid leave for training under the Volunteers Employment Protection Act 1973. Employers are required to hold the positions for up to 12 months for employees who volunteer or are called upon a situation of national interest.
Pension and Social Security
The normal retirement age is 65 years for individuals who have lived in New Zealand for a minimum 10 years since the age of 20 years or 5 years since the age of 50 years. A work-based savings initiative called KiwiSaver requires employees to make contributions equal to 3% of their pay and employers are required to make contributions equal to at least 3% of employees’ wages.
A 3-pillar pension system comprises:
1st Pillar: The New Zealand Superannuation, a non-contributory state pension
2nd Pillar: KiwiSaver scheme
3rd Pillar: Private pension savings
The New Zealand Superannuation (NZS) provides social protection in the form of a flat-rate pension to all residents who have lived in New Zealand for a minimum 10 years since the age of 20 or 5 years since the age of 50. This pension is financed using general tax revenues.
The KiwiSaver scheme came into effect in July 2007 in addition to the private sector superannuation schemes to complement the pension schemes available to the 2nd pillar pensioners. New employees get enrolled automatically and can opt out within 8 weeks. Occupational pensions are provided via superannuation schemes on a stand-alone basis or as a part of a master trust.
Accident Compensation Insurance, provided by the Accident Compensation Corporation (ACC), offers coverage for both workplace and non-workplace injuries suffered by both residents and visitors to New Zealand. In case an individual is rendered incapable to earn a living, ACC pays weekly compensation up to a maximum 80% of previous wages.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into New Zealand and hire their employees without having to establish a branch office or subsidiary in New Zealand.
- Your candidate is hired via our New Zealand PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with New Zealand laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 100+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.