Manage Employment in New Zealand Without the Hassle

In New Zealand, the standard working hours typically range from 7.5 to 8 hours per day, Monday to Friday, totaling around 40 hours a week. These hours may vary depending on the company’s specific requirements. The probation period for new employees can be up to 90 days, although the exact duration is subject to the employment contract and is only applicable to employees who have not worked for the employer before.

Payroll Cycles: Employers in New Zealand generally operate on bi-weekly or monthly payroll cycles, though the payment frequency is decided by the employer and is not fixed by law. Employees are typically paid on the 28th to 30th of the month for monthly cycles or on agreed dates for bi-weekly cycles, often falling on Wednesdays or Thursdays. Payroll systems in New Zealand allow flexibility, but employers are required to ensure wages are paid within a reasonable timeframe.

Deductions from Salary: Employees in New Zealand have several statutory deductions taken from their salaries. These include:

• Income Tax: Tax rates are progressive and depend on income brackets.
• ACC Levy (Accident Compensation Corporation): Provides insurance for workers in case of injury.
• KiwiSaver Contributions: A mandatory retirement savings scheme, with both employee and employer contributions.
• Student Loan Repayments: If applicable, repayments are deducted from employees’ wages based on their income.

Public Holidays:
New Zealand provides a total of 10 public holidays each year, which employees are entitled to, depending on their work schedule. These include major holidays like New Year’s Day, Waitangi Day, and Christmas Day. If an employee is required to work on a public holiday, they are typically entitled to additional pay, depending on the employment agreement.

Earned Leave (Annual Leave):
Employees who have completed at least 12 months of continuous service are entitled to four weeks of paid annual leave. This leave is typically accrued annually and can be used for vacation or personal purposes. If employees do not take all their annual leave during the year, they are compensated for the unused days upon termination of employment.

Overtime and Extra Pay:
New Zealand law stipulates that overtime pay must be provided when employees work beyond the standard hours outlined in their employment contracts. Overtime rates are determined by the employment agreement, often providing extra compensation for hours worked beyond the typical 40-hour week. The rates may vary depending on the type of work and the day of the week, particularly for weekends or public holidays.
These employment parameters, including wages, leave entitlements, and deductions, help ensure a fair working environment for all employees in New Zealand while complying with local labor laws.

Casual Leave/Sick Leave

• Eligibility: Employees in New Zealand are entitled to 10 days of paid sick leave annually after completing six months of continuous employment.
• Legislative Update: The entitlement follows amendments introduced by the Holidays Amendment Bill. The adjustments come into effect at the employee’s next entitlement date, which may be six months into employment or on the anniversary of their last entitlement period.
• Sick Leave Accumulation: Employees may accumulate up to 10 unused sick days each year. Consequently, the total sick leave entitlement may reach 20 days in any given year. Unused sick leave can be carried over to the following year, up to this limit.
• Applies to All Employment Types: The policy extends to full-time, part-time, and fixed-term employees who have been employed for more than six months.
• Casual Employees: Casual workers qualify for sick leave if they have been continuously employed with the same employer for at least six months, or if they have worked an average of 10 hours per week during that period.

Primary Carer Leave (Maternity Leave):

• Available to employees who are either pregnant, their spouses or partners, or those assuming primary responsibility for the care of a child under six years old. This also applies in cases of adoption, but not foster care or other temporary care arrangements.
• The employee and their partner can mutually decide who will be the primary caregiver.
• Pregnant employees are entitled to 26 weeks of paid primary carer leave.
• The government provides a payout between 177 and 585 NZD per week before tax during this leave period.
• Primary carer leave begins either on the child’s due date or when the employee becomes the primary carer—whichever happens first.
• Employers may allow this leave to start up to six weeks before the baby’s birth or when the employee becomes the primary carer of the child.

• Partners are entitled to 21 days of paid leave, starting from 21 days before the expected birth date to 21 days after.
• In cases where the baby is discharged from the hospital more than three weeks after birth, the leave extends to the date of discharge.

Earned Leave
All employees who have completed one year of service are entitled to four weeks of paid annual leave. If an employee does not use all their allotted days, they will be compensated for them upon termination.

Payroll Process:
The payroll process in New Zealand involves calculating the gross income (salary before tax) and adjusting it to the net income (take-home pay) by deducting taxes and other mandatory contributions. The process ensures employees receive their earnings after all required deductions are made.
The basic formula for take-home pay is:
Take Home Pay = Gross Salary – Total Deduction
This allows for transparency in how much an employee will actually receive after all deductions are applied.

Key Elements of Salary Structure:

• Gross salary – the total earnings/wages entitled to an employee before any form of tax deduction is applied.
• Take Home Pay: This is the final amount employees receive, which is the net salary after taxes, superannuation, and other deductions (such as student loans or voluntary contributions to retirement funds) have been subtracted.
• Total Tax Deducted – this is the sum of all the deductible taxes and contributions that are due to be deducted from the Gross salary of respective employees.

  Anything over the weekly average of hours is to be paid as overtime, and this fluctuation must first be discussed between Employer/Line Manager and employee.

Payroll Cycle:
In New Zealand, employers generally have the freedom to choose the payroll cycle for their business operations, but the most common payroll cycles are monthly and bi-weekly.

• Monthly Pay Cycle: Employees are paid once a month, typically on the last working day of the month.
• Bi-weekly Pay Cycle: Employees are paid every two weeks, usually on a specific day like Wednesday or Thursday.

13th Salary:
Unlike some countries, New Zealand does not have a legal obligation for employers to provide a 13th salary (an extra month of salary paid at the end of the year). However, some employers may voluntarily offer this as part of their employee benefits package, but it is not required by law.

Overtime:
In New Zealand, overtime pay applies to hours worked beyond the standard weekly schedule. The typical workweek consists of 40 hours (5 days, 8 hours per day), but hours can vary depending on the employer and industry.

• Overtime Rates: There is no legal requirement for overtime pay in New Zealand. However, many employers pay employees 150% of the regular hourly rate for overtime hours worked, as a standard practice.
• Agreement on Overtime: Overtime payment rates are usually negotiated between the employer and employee in the employment contract. The exact rate and conditions depend on the industry and the employer’s policy. If an employee regularly works overtime, it’s common for this to be reflected in their employment agreement.

Step 1: Get A Visa

• Entrepreneur Visa
  The entrepreneur work visa is divided into two categories based on the development of your business. If you are ready to start a new venture, the application for a six-month visa will be accepted if approved.
  If your business meets the important criteria of having at least NZ$100,000 in working capital, scoring a minimum of 120 points on the country’s grading system (which evaluates success and contributions) and demonstrating an unblemished history with no fraudulent or winding up activities involved – applying visa to remain in the land for another 24 months is possible.
• Residential Visa
  If you’re a foreigner wishing to make this country your home and run a business, then the residential visa is for you. Note that it comes with more rigorous requirements than those needed for an entrepreneur work visa.

Step 2: Come Up With A Business Structure

Step 3: Pick A Name

Step 4: Set Up RealMe Login

Step 5: Create A Business Banking Account

Step 6: Observe Legal Obligations

• New Zealand Business Number (NZBN)
  Kiwi companies have a requirement to register and receive a New Zealand Business Number (NZBN). This individual code is specifically designed for each New Zealand company, with the intent of enabling easy identification as well as data sharing among businesses.
• Protect Your Brand
  It is essential to have a distinct business identity. Investigate carefully to ensure that your brand logo does not unintentionally copy any current logos. Once you are sure that your trademark and logo are unique, register them right away. Registering for a domain name additionally guarantees the originality of your business’s branding.
• Obtain Licenses and Permits
  It is essential to check the laws with the local government, as regulations vary between cities. Apart from any existing licenses or permits that you already know of, make sure you possess all necessary authorizations based on the type of business before launching it.
• Fulfil Tax Burdens
  If your business generates more than NZ$60,000 yearly, it is essential to register for GST with the Inland Revenue Department. To prevent paying fines, ensure you are up-to-date on all filing deadlines. The Inland Revenue Department features various instructional videos and tax workshops that can help foreign investors comprehend their responsibilities regarding taxation easier and faster.