Misclassification fines include back-payments for PAYE, minimum wage, holiday and leave entitlements plus penalties starting at NZ$ 30,000. Directors and managers may be personally fined if involved.

FUN FACT

New Zealand was the first country to give women the right to vote and to introduce pensions for the elderly.

Taxes

Employer tax:

3%+

Kiwi saver scheme - 3%

Accident compensation levy - depends on industry

Fringe benefits tax - 11.73% - 63.93% (only if offering fringe benefits)

Employee tax:

11.89% - 50.39%

KiwiSaver - minimum 3% if participating

Accident compensation levy - 1.46%

Income tax:

GROSS INCOME	PROGRESSIVE TAX RATE
Up to $14,000	10.5%
$14,001 - $48,000	17.5%
$48,001 - $70,000	30%
$70,001 - $180,000	33%
Over $180,000	39%

Salary Calculations

Use our handy calculator to understand what are all the employment costs you have to consider in New Zealand.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in New Zealand

An Employer of Record is the legal employer of a worker in New Zealand. As such, the Employer of Record takes care of all New Zealand compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws

Processing local payroll

Filing employment related taxes and returns

Issuing payslips to the employee

Distributing salary payments

How Employer of Record works

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

The third party to the agreement, the employee, fulfils all of their obligations as a worker for the company.

Statutory Benefits

KiwiSaver

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.

Accident Compensation Corporation

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.

Common Non-mandatory Benefits

Flexible working

Employee assistance program

Career development

Wellness programs

Hardware

Health insurance

Additional parental leave

Charity work leave

Additional holiday

Employee Rights and Protections

Written employment agreement

Payslip

Flexible working

Health & Safety

Protection from discrimination

Pay and employment equity protection

Unemployment funds

Personal information protection

Work unions

Leave

Paid time off: 20 days + bank holidays

Paternity leave: In New Zealand, it's known as a partner's leave and is available to the partner of the mother regardless of their gender. 1-2 weeks of unpaid leave determined by length of employment

Sick leave: 10 days

Bereavement leave: three days of paid bereavement leave upon a close family member's death

Maternity leave: In New Zealand, it's known as primary carer leave. 26 weeks of paid primary carer leave and 4-26 weeks of unpaid leave

Probation

In New Zealand, 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.

Payment Frequency

Generally, it is fortnightly, but it can also be monthly.

End of Employment

Before terminating a New Zealand employee (except in cases of gross misconduct and redundancy), employers must have a good reason and are required to follow a fair grievance procedure.

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 open-minded 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 agreement.

Frequently Asked Questions

What are my options if I want to hire a worker in New Zealand?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in New Zealand, outlining the potential cons.

HQ country employment & payroll

While the person is in New Zealand, they are employed and payrolled directly by the company’s HQ entity.

Cons: This may appear attractive, but it generally isn't legal in the long term. HQ payroll won't be possible if the person is not a tax resident in the HQ country.

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in New Zealand and invoice for their work. There is no direct employment relationship.

Cons: In New Zealand, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.

Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

Partnering with an Employer of Record New Zealand /full-service Professional Employer Organisation

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.

Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

How long does it take to set up a company in New Zealand?

Setting up a local company in New Zealand is relatively straightforward. However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in New Zealand?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in New Zealand, treating them as an independent contractor is a likely breach of New Zealand employment laws and of those in your country.

Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.

What does HR compliance mean in New Zealand, and why does it matter?

When you hire employees in New Zealand you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in New Zealand is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

How much does it cost to employ someone in New Zealand?

As with every other country, there are certain costs associated with employing a worker in New Zealand that come on top of the gross salary you are offering. A New Zealand employer must contribute to the employer superannuation contribution tax. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

What does Employer of Record mean in New Zealand?

It means that Boundless is the legal employer of the individual, as far as the New Zealand government, tax, and employment authorities are concerned. We are responsible for:

informing you about any pre-employment requirements
ensuring their employment is compliant with New Zealand employment law
informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
providing a locally compliant employment contract
processing local payroll
filing employment-related tax returns
issuing payslips to the employee
distributing salary payments
payments to the local tax authorities

Customers that work with an Employer of Record in New Zealand are responsible for:

sourcing and recruiting their own workers
managing the employee’s day-to-day work load
contributing to the personal / professional development of the employee through their work
following any guidance we give on employment and HR best practices or legal obligations in New Zealand, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in New Zealand if employing through an Employer of Record?

Boundless, as the Employer of Record New Zealand, files all pertinent taxes, New Zealand pension plan contributions and other contributions to the social system in order for the New Zealand employee to be compliant.

How does Boundless as an Employer of Record New Zealand ensure HR compliance in New Zealand?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including New Zealand. They ensure the New Zealand employment agreements, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in New Zealand our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use an Employer of Record service like Boundless in New Zealand?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.

Boundless ensures compliance with New Zealand-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through an Employer of Record in New Zealand?

Any new employee that is locally employed through an Employer of Record gets full employment rights and benefits as specified in New Zealand employment law. They get a locally compliant employment agreement, statutory maternity leave, annual leave, social security benefits, any relevant tax credit, and many more.

What taxes do I need to pay in New Zealand?

In New Zealand, both employers and employees have to pay taxes. For employers, these include the Kiwi saver scheme, Accident compensation levy and the taxes on fringe benefits if offered to employees. For employees, these are Kiwi saver contributions, accident compensation levy and income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in New Zealand

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New Zealand

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