Before terminating an employee, an employer must have a good reason for dismissal, such as:
Does not require a grievance procedure, but should only be considered once all redeployment options have been exhausted ** Does not require a grievance procedure
Employees have the right to request a written statement covering the reasons for dismissal within 60 days of being terminated (verbal explanation for employees on a trial period). Employers must respond within 14 days. Employers may choose to pay instead of having the employee work their notice period if both parties agree or if covered in the employment agreement.
Employees dismissed due to serious misconduct do not work their notice period nor get paid for it.
Employers must be de-registered by the employer once employment ends. The employee's final pay should include the hours worked since the last pay date, payment for annual holidays, and any additional owed payments (sick pay leave is not mandatory). Employees should receive their final pay on their last day or the payday for their final employment period at the latest.
Before terminating an employee (except in cases of gross misconduct and redundancy), employers must have a good reason and are required to follow a fair grievance procedure in good faith that involves:
Employees are protected from being terminated for whistleblowing, being pregnant or part of a union and taking or requesting parental leave. Furthermore, employers must act in good faith, have a good reason, follow a fair process and be openminded when dealing with problems to ensure outcomes are not pre-determined.
Protected employees unfairly dismissed can take personal grievance claim against the employer.
Employers cannot make someone redundant without going through the workplace change process first. Redundancy pay is not mandatory in New Zealand, and employees are only entitled if it's mentioned in their employment contract.
An employee can resign at any time. The resignation process starts with the employee notifying their employer and handing in their notice. They have to respect the notice period agreed on the contract, if any, unless both parties agree otherwise. Resignation doesn't have to be done in writing; however, it is recommended.
At the end of the notice period, the employee must return all company property, and the employer might include an exit interview.
New Zealand doesn't have a statutory requirement on the length of notice periods in employment agreements, which varies from company to company. The only requirement stipulated by law is that it should be a reasonable period, and it should be in writing. Commonly, the notice period is four weeks (1-2 weeks for someone on a trial period). Immediate dismissal is permissible under serious misconduct, and the employer is not required to pay any notice.
Severance pay is not mandatory in New Zealand, and employees are only entitled if it's mentioned in their employment contract.
Employees get a minimum of four weeks (20 days) of paid annual leave a year. Annual leave is accrued every full year with the company rather than the calendar year. Employees can take up to two weeks consecutively, or all at once under exceptional circumstances.
Employees can only take their paid leave after completing a full year with the company unless agreed otherwise. Unused holidays are automatically carried over, but employers may request them to be used within the year accrued. Employees may exchange one week of leave for cash.
There are ten national public holidays, plus one regional anniversary. Employees are paid for public holidays that fall on a regular working day. Employees who work during a public holiday are entitled to 1.5 times their regular pay plus an alternative day off.
|1/1/2022||Saturday||New Year's Day*|
|2/1/2022||Sunday||Day after New Year’s Day**|
* Substitute day on Monday, January 3rd
** Substitute day on Tuesday, January 4th 8th
*** Substitute day on Monday, February 8th
**** Substitute day on Monday, December 26th
***** Substitute day on Tuesday, December 27th
Employees can use sick leave when they feel unwell or have been injured, or to look after a child, a spouse or someone else in their case who is injured or ill. Sick leave entitlement is ten days per year after six months of continuous employment and can be accumulated to 20 days. Employers may agree to extend the ill leave entitlement before the 6-month minimum.
In case an employee receives Accident Compensation Corporation (ACC) or workers' compensation payments for more than five days, both employers and employees are allowed to increase the ACC payment from 80% to 100% by reducing one day from employees' sick leave balance.
In New Zealand, maternity leave is known as primary carer leave or parental leave, and is available for employees who are:
The length of leave depends on how long the employee has been employed by the same employer, as follows:
The employee is also entitled to 10 days of unpaid leave for pregnancy-related appointments.
The government funds the payment, which is capped at NZ$585.80 weekly before tax. The employee can start their primary carer leave up to six weeks (or earlier with the employer's consent) before the child's arrival date.
In 2021, New Zealand passed a law that gives both parents 3 days of paid leave for miscarriage or stillbirth at any point during the pregnancy (it does not apply to abortions).
In New Zealand, paternity leave is known as partner's leave, and available for the partner of a new mother, regardless of the gender. The leave is unpaid and lasts two weeks for people who have been for one year with the employer (one week for people employed for only six months) and can be taken any time within 21 days before or after the birth or adoption.
The primary carer may transfer some of their unpaid leave (4-26 weeks) to their partner.
Employees are entitled to three days of paid bereavement leave upon a close family member's death, including their parents, spouses, children, grandparents, mother or father-in-law. They are also entitled to one day leave upon a person's death not included in the list above, which however causes suffering. In case of more than one death, employees are entitled to an additional three days' bereavement leave in a month.
Employers should cover every employee for accidents at work through the Accident Compensation Scheme (ACC). Employees are covered during the time of injury, and the follow-up recovery. The employer is responsible for the first week's pay at 80% of the employee's salary, after which the ACC takes over, at 80% rate. The minimum weekly compensation is NZ$566.40, and the maximum is NZ$2,015.59.
If the injury leave exceeds five days, the employee can ask for the payment to rise from 80% to 100% by using one sick leave day for every five days taken.
Employees who volunteer in the armed forces are entitled to unpaid leave for training. Employers must hold the positions for up to 12 months for employees who volunteer or are called upon a situation of national interest.
Domestic violence victims can claim up to 10 days of paid domestic violence leave in every 12 months. Employees can also request a short-term (two months or less) variation in their hours, days, or place of work to help cope with the effects of being subject to domestic violence. To be eligible, employees must have worked for their employer for at least six continuous months.
Employees who have been called for jury service must attend it, and their job is protected while they attend jury service. Employees on jury service are entitled to unpaid time off.
Employers can offer sick leave to employees if they have work-related stress. This can help employee's health and productivity. The stress leave is, however, not a legal entitlement and it's up to the employer to decide if they provide it or not. The length of the leave and whether it is paid is at the discretion of the employer.
NZ$18.90 per hour (changing to NZ$20.00 in April 2021).
Generally, it is fortnightly, but it can also be monthly.
Depends on the company, but commonly on the 28th of every month.
Monday to Friday, 8:30 am to 5 pm, with half an hour lunch break.
Forty hours a week, not including overtime. Not more than five days a week.
The employer and employee may agree on longer weekly hours, which should be reflected in the employment agreement.
Not mandatory, but companies usually pay the same or a higher rate to employees working overtime. An employee’s salary may never fall under the minimum hourly rate of NZ$18.90 for all the time they work, including overtime. Employment agreements should include overtime clauses and wages.
The compensation of salaried employees need not be adjusted when they work more than their regular weekly hours unless this is provided for in the employment agreement.
Employees are entitled to two 10-minute paid rest break during work and one 30-minute unpaid meal break. Women who breastfeed or express milk are entitled to extra breaks and facilities where practical (unpaid).
Employers are obliged to keep work time, holidays and leave records, proving they have given employees all minimum employment entitlements. Employees have the right to know and see everything recorded on their file.
The record-keeping must show a clear picture each day in an employee’s working year, including which days were worked on, which were taken off, when employees took leave and what type. Employers may take records on paper or electronically, and must keep them for seven years, even if the employee leaves the company.
Employers who do not keep all the accurate time, holiday and leave records may receive an infringement notice for breach of requirements. The Employment Relations Authority may fine them between NZ$50,000 and NZ$100,000 or three times the amount of financial gain made.
Employees have the right to request to work from home, regardless of the length of employment. The request must be in writing and doesn't require a specific reason. The employer has one month to reply, and if they decline the request, they must present a good business reason for it.
After requesting flexible work, the employee's responsibility is to consider the technology and equipment they will need and list their requirements. If the arrangement creates additional costs for the employer, it is at the employer's discretion to invest in the equipment or not.
An employee may be entitled to a one-off set up allowance. This arrangement will be at the employer's discretion and is not guaranteed. The cost of general utilities such as electricity, gas, water and smoke detectors is usually the employee's responsibility.
When working from home, an employees' home is considered a workplace. Therefore there is a shared responsibility between the employee and their employer under the Health and Safety at Work Act 2015 to eliminate or minimise any health and safety risks. This means that it should get the same health and safety risk assessment as an office. This includes ergonomics of the workstation setup, fire safety equipment, and first aid kits.
Here are some things employers should consider when supporting the wellbeing of their employees and managing health and safety risks when working from home.
Employers are responsible for talking through and developing policies on how employees should manage their health and safety when working at home.
The employee is responsible for organising a work area that is appropriately set up to ensure that they can work safely. To ensure that this is the case, an employer may request an employee to provide photos of their work location and may also request a health and safety assessment of the workstation.
Employers are responsible for:
Employers should talk to their team about how to follow privacy and security requirements for the type/classification of information they are allowed to access when working at home. All security policies that would apply to employees who are working in the office, also apply when employees work remotely from their homes. Employees may need to adjust the work they do or take extra precautions to protect the information, such as physically locking devices and information away if not in use.
Employees should keep all work information safe and secure and avoid using public WiFi networks.
Employees should minimise or eliminate risks by creating a good workstation that includes appropriate ventilation and light and clear path with no cords sticking up or furniture that might cause accidents.
To meet their responsibilities under the Health and Safety Act 2015, employees should:
The standard length of probation periods is around 3 to 6 months, but there is no legal limitation. They must be recorded in the employee's employment agreement.
Apart from the probation period, there is also a trial period in companies with 19 employees or less. The trial period is a maximum of 90 days and can be requested only the first time the employee is employed.
Employers must request the trial period at the start of the first day of the employment agreement. This agreement must be in writing and mutually agreed by the employee and employer.
Employees on probation or trial periods have the same minimum rights and entitlements as any other worker.
Employers must keep records for seven years of every employee's wages, hours worked, paid time off, various leaves, pay sheets, PAYE payment receipts, all tax code declaration forms, KiwiSaver forms, and any certificates and notifications received from the employees or Inland Revenue.
Employees have the right to know what has been recorded and can request to see it or be given a copy of their file.
Employers are only allowed to make deductions on employee's salaries required by law for income tax, ACC, KiwiSaver, child support and student loan repayment.
Ending employment requires following a certain disciplinary process, which can take many forms. Employers must first assist employees in working through the issues they have with them and deal with them before they become more significant. It should be primarily a corrective measure, aimed at preventing further misconduct. Employers must follow a fair and reasonable disciplinary process.
If the misconduct continues and the situation does not improve throughout employment, the employer can go through a further formal process. That may result in a final warning or termination of employment.
A support person can accompany employees for any discussion relating to the Disciplinary Process.
Employers must give New Zealand employees a written employment agreement that they have agreed upon and signed before starting work. The following clauses are mandatory and should appear in every contract:
Collective bargaining agreements (CBAs) are not common in New Zealand.
It is not mandatory to provide payslips in New Zealand, but employees have the right to see information about how their employer has worked out wages and see the time records relating to their hours of work. Employees also have the right to request information about their annual leave and sick leave entitlement.
Employees are entitled to work in environments where their health and safety risks are properly controlled and where they have access to adequate facilities. These include toilets, washing facilities and first aid. Employees should have sufficient training, information and support on how to do their job safely, must contribute to health and safety decisions, are required to have personal protective equipment (PPE) and are entitled to a Health and Safety Representative or Committee.
Employees can request at any time and for any reason to change their hours, days or place of work. The right to flexible work also extends to how work is done, how it's started, finished and managed in the workplace to help employees and businesses. After an employee has requested flexible work, the employer has one month to reply in writing and doesn't have to agree with the request if there is a good business reason for declining.
Flexible work arrangements include reduced or increased hours, flexible hours, job-sharing, working remotely and paid study leave.
All people are protected from unlawful discrimination in their employment. This includes age, race or colour, ethnicity or national origin, gender, sexual orientation, disability, religious or ethical belief, marital or family status, employment status, political opinion, being affected by domestic violence.
Bullying is seen as repeated and unreasonable behaviour directed towards employees, including physical, verbal or relational/social acts such as excluding someone or spreading rumours. It may include victimising, humiliating, intimidating, or threatening an individual. It is not a one-off incident of unreasonable behaviour or occasional instances of rudeness or misjudgment.
Harassment is any unwanted or unjustified behaviour which an individual finds offensive or humiliating, including sexual or racial harassment. Its seriousness or repetition harms their employment, job performance, or job satisfaction.
Whistleblowers have legal protection unless the information they are disclosing is protected by legal professional privilege. Their identity will be kept confidential unless disclosure is essential to:
An employee who suffers retaliatory action by their employer for their protected disclosure can make a claim under the Employment Relations Act.
Under the Human Rights Act, it is unlawful to treat acting or potential whistleblowers less favourably than others. Several legal remedies under the Human Rights Act may be available to whistleblowers.
Regardless of their gender, race, colour, nationality and age, employees are entitled to equal pay for doing the same work or doing work of equal value. Work value is assessed in terms of skills, knowledge, responsibility, effort, and working conditions.
The Privacy Act stipulates that the following employee data must be protected and respected:
Data that is public knowledge can be stored in open databases. Employers should collect only relevant and accurate personal information, keep it secure and use it for limited purposes. Employers shouldn't keep personal data for longer than necessary.
Unemployment benefits are provided by the government and are available to New Zealand citizens and permanent residents who become unemployed. To qualify, the person must be unemployed, over 18, actively looking for a new job and have lived continuously in the country for at least two years. The benefit ranges from NZ$175 to NZ$428, depending on age, family status, number of dependents, and other personal circumstances.
Employees have the right to join a union or not, and employers cannot influence their decision.
KiwiSaver is a voluntary savings scheme available to every new employee between the ages of 18 and 65. Its purpose is to help set employees up for retirement. The default employee contribution rate is 3% and can be extended to 10%. In addition, the employer also contributes 3%. Employees are automatically enrolled and can opt-out within the first eight weeks after joining the company if they so wish.
Employers must cover all employees with accident insurance in the workplace for all work and non work-related injuries. Coverage is around 0.72-1% of the employer’s monthly payroll.
Most common non-mandatory benefits in New Zealand. offer to employees. Many tech startups in New Zealand let employees get an extra paid day off on their birthday.
A flexible work environment might mean a physically flexible workspace or alternate location, or it might refer to employees’ ability to apply flexible working practices to their roles. Most tech companies give employees the options to work from home for a better work-life balance.
Employee Assistance Programs (EAP) are free and confidential counselling and support services for employees. Employees are provided with practical assistance whenever personal or work issues arise that may impact any area of life or wellbeing. The counselling may be specific or general, for example, budgeting assistance or CV writing skills. Organisations often offer EAP to their employees as part of their more comprehensive health and safety program or as part of initiatives for improved diversity and inclusion.
Many companies offer assistance in developing employee career paths. This may include internal and external professional training to ensure employees stay up to date, progress in their career and grow in an organisation.
Companies may offer a range of different options to assist with the wellbeing of their employees. Things could include EAP, flexible working arrangements, fruits and snacks and discounts on gym memberships and health insurance policies.
Most tech companies give new employees new laptops and ergonomic setups when joining the company.
New Zealand has a free public healthcare system. Some employers may offer Private Health Insurance to their staff, usually limited to senior roles.
Share options are commonly offered by tech employers who want to encourage staff participation in a company shared ownership.
Some organisations provide employees with extended paid parental leave. This extension needs to be agreed between the employee and employer.
Some companies let employees take unpaid leave for extended holidays while some offer unlimited paid time off.
Some companies encourage charity work by offering time for it as a paid leave.
Tax is withheld by the employer from employee's payments through payroll and paid to the Inland Revenue Department.
Employers and employees contribute to a statutory accident insurance scheme. Employers pay premiums for work-related accidents insurance. Employers have to pay a residual claims levy and an employer levy. The amount of the levy that employers pay is determined according to the industry or risk classification and employees' earnings.
The contributions employers make to an approved superannuation fund (excluding foreign schemes) are subject to ESCT. This includes employer contributions to KiwiSaver (or other qualifying registered superannuation schemes).
ESCT is generally deducted at the employee's applicable progressive rate based on the total salary or wages and employer superannuation cash contributions paid to the employee in the previous year.
|AMOUNT IN NZ$||RATE IN %|
|Up to 16,800||10.5%|
|16,801 - 57,600||17.5%|
|57,601 - 84,000||30%|
The KiwiSaver is a workplace-based superannuation savings scheme that operates on a voluntary basis and is available to all employees older than 18. Employers must contribute on behalf of all employees who are members. Employers must calculate ESCT at a rate equivalent to an employee's annual salary and wage plus the employer's gross yearly contribution. The minimum contribution rate for both employee and employer is 3% each of the gross salary.
New Zealand is one of the countries where employers are responsible for the fringe benefits tax. It's paid on the value of all non-cash fringe benefits provided to employees, and the amount is tax-deductible. Employers can decide to pay the tax at flat rates (49.25% on attributed benefits and 42.86% on pool benefits) or calculate it for each employee and pay the tax based on their marginal tax rate.
Under the latter attribution option, the applicable FBT rate will depend on the employee's net salary (including fringe benefits). The calculation takes the fringe benefits' cash value and calculates the FBT as the notional increase in income that would have arisen.
Fringe benefits include:
These are not taxable to the employee, but the value of a benefit from the provision of shares or options, lodging, or housing by an employer is taxable. Other benefits provided to an employee in a non-monetary form are generally not taxable in the employee's hands.
Allowances paid in cash that are no more than reimbursement of business-related expenses incurred within employment are generally not taxable. Certain relocation costs, overtime meal allowances, and accommodation benefits paid by employers are exempt from income tax and FBT. Business tools such as mobile phone or laptop provided for work that do not exceed NZ$5,000 are not subject to FBT.
The tax threshold for exempting unclassified FBT benefits is NZ$300 per employee per quarter and NZ$22,500 per employer per annum.
|NET REMUNERATION IN NZD||FBT RATE IN %|
|Less than 12,530||11.73%|
|12,531 - 40,580||21.21%|
|40,581 - 55,980||42.86%|
|More than 55,980||49.25%|
New Zealand residents are subject to tax on their worldwide income, which includes salary, wages, bonuses, allowances, and retirement gratuities received in cash. Individuals are considered New Zealand residents in the following circumstances:
Non-resident pay tax only on their New Zealand income. They may be exempt from paying New Zealand tax if all the following conditions apply:
There is a temporary four-year tax exemption from income tax on foreign income, which is extended to new immigrants and Kiwis returning to New Zealand after being away for at least ten years. It applies to people becoming residents in New Zealand after April 1, 2006. They can receive the exemption only once in a lifetime. Income from overseas employment performed while living in New Zealand and business income relating to services performed offshore is excluded.
KiwiSaver is a voluntary workplace-based superannuation savings scheme available to all employees over the age of 18. Employers automatically enrol new employees who must opt-out within prescribed time frames if they wanted to. The minimum contribution rate for both the employee and the employer is 3% of gross salary.
This is known as the Accident Compensation Corporation (ACC). Employer premiums fund insurance for work-related accidents while premiums paid by employees fund non-work accident insurance. For 2020, the premium is a flat rate of 1.39% of gross earnings up to NZ$130,911.
|TAXABLE INCOME (NZ$)||TAX ON COLUMN 1||INCOME TAX ON EXCESS|
|14,001 - 48,000||7,420||17.5%|
|48,001 - 70,000||14,020||30%|
Married people are taxed separately.
Best Start helps families with child care costs after the paid parental leave ends. All families with new babies are entitled to NZ$60 a week during the child's 1st year. If the household income is less than NZ$79,000, they will continue to receive $60 per week until the child turns three.
Individuals with annual income between NZ$24,000 and NZ$48,000, who meet specific requirements are entitled to an 'independent earner' tax credit of NZ$520. For eligible individuals who earn over NZ$44,000, the annual entitlement decreases by 13 cents on each additional dollar earned up to NZ$48,000, at which point they no longer qualify for the credit.
An individual can claim a 33.3% tax credit for eligible charitable donations, up to their taxable income.
Employers can choose to provide allowances on top of employees' usual pay in the form of extra money for things like accommodation, meals and clothing. These allowances are taxed through PAYE.
Generally, an accommodation or an accommodation allowance is taxable via PAYE, with some tax-free exemptions:
Allowances to help cover the costs of meals and clothing employees have to buy as part of their job are usually tax-exempt. Some examples include:
These allowances are specifically for employees travelling from their home to work. This allowance is taxed via PAYE unless the employee is:
Cash benefits made in addition to an employee's salary or wages are taxable, and include things like:
Unexpected on-the-job expenses that employees incur, such as paying for meals or travel when they're away from their typical workplace, should be refunded to them by their employer.
Employees are reimbursed either by providing receipts or by the employer, making a reasonable reimbursement estimate. Reimbursements are generally added to the salary of the employee after their PAYE has been deducted. Reimbursed expenses are not taxable. However, if the payment is more than the cost, the excess amount is taxable.
Employers sometimes cover the employee's own and their family relocation costs. The payment may be tax-free if they are relocating to:
Relocation expenses will generally only be tax-free if the employee's home is a substantial travelling distance from the new workplace.