Businesses partner with a New Zealand EOR to navigate the complexities of local tax regulations, benefits, and payroll. This strategic move ensures compliance with labor laws and facilitates the efficient management of payroll, tax obligations, and employment contracts. In a market where a skilled talent pool complements the business growth, choosing an EOR becomes crucial for employers seeking a smooth and successful entry into the New Zealand business landscape.

For employers looking to expand into APAC, New Zealand’s geographic location can make it highly appealing. The time difference between New Zealand and many significant APAC economies ranges from two to five hours. Businesses looking to set up sales teams and customer success teams can hire from New Zealand’s talent pool to tap into lucrative markets in APAC with ease. 

However, to tap this lucrative market, foreign employers must pack the necessary resources to navigate New Zealand's labor codes and employment laws. For example, laws around New Zealand’s minimum wages, social security, and terminations greatly differ from those in developed countries. 

While comprehending these labor laws is relatively straightforward, achieving compliance while hiring and paying employees will be difficult. You may have to hire local compliance experts to adhere to labor laws.

Partnering with a New Zealand EOR and PEO helps you skip all these hurdles. With an EOR, you can employ talent in New Zealand onto the EOR’s local entity and payroll. By acting as the primary employer for your local talent, the EOR will free you up from all onboarding and payroll activities. The EOR also helps you stay compliant with local labor laws as well.

The pricing for Employer of Record (EOR) or Professional Employer Organization (PEO) services in New Zealand is influenced by various factors, including the number of employees, the extent of required services, and the project's complexity. Typically, the pricing structure entails a monthly fee per employee or a percentage based on their salary. Additional charges may be applicable for tailored services or specific business requirements. To obtain a personalized and transparent pricing package aligned with your business goals in the New Zealand market, we recommend consulting with our trusted EOR partner, Gloroots. Leveraging their expertise ensures a thorough understanding of your unique requirements, facilitating a cost-effective and seamless expansion into the New Zealand business landscape.

Key Metrics For Foreign Employers 

‍Source: The Global Talent Competitiveness Index 2023

In New Zealand, effectively navigating the challenge of "Misclassification of Workers" is of utmost importance, as inaccuracies in categorizing employees can lead to significant risks, such as misidentifying independent contractors or incorrectly classifying individuals as exempt from specific regulations. To adeptly address and mitigate these risks, engaging a PEO/EOR is crucial. Partnering with Gloroots, a trusted ally, ensures a steadfast commitment to strict adherence to labor laws, precise worker classification, streamlined payroll management, and comprehensive employee benefits.

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Employment contract

In New Zealand, an employment agreement is a crucial written document that formalizes the working relationship between an employer and an employee. To initiate this agreement, both parties sign a contract that explicitly outlines the terms and conditions of their professional engagement. The contract, typically set for an initial 30 days based on collective agreements, allows room for renegotiation afterward. During this period, the employee can express their intention or non-intention to join a trade union in writing.  The contract must contain :

• Parties Involved: Identification details of both employer and employee.
• Job Description: Clear outline of the roles and responsibilities associated with the position.
• Workplace Details: Specific location/s where employees are expected to carry out their duties.
• Work Hours: Defined working hours and any stipulations regarding flexibility or overtime.
• Payment Structure: Details on how the employee will be remunerated, including salary, benefits, and payment frequency.
• Problem Resolution: Explanation of the process for addressing and resolving employment-related issues.
• Employment Protection: A Clause specifying protection measures for relevant employees.
• Notice Period: Optional, but often included, outlining the period either party must give before terminating the contract.
• Probationary Period: Optional, specifying a trial period for the employee's performance evaluation.
• Annual Leave: Optional, but commonly included, outlining the entitlement and procedures for taking annual leave.

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Working time

In New Zealand, there is no mandated minimum requirement for working hours. Typically, full-time hours range from 7.5 to 8.0 hours per day. It is essential that the employment contract explicitly outlines the number of hours an employee is expected to work, whether exceeding or falling below 40 hours per week.

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Overtime

The compensation for overtime should be clearly specified in the employment agreement, or it can be outlined in the company's policies..

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Public Holidays

10 public holidays throughout the year (approximately).

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Minimum Wage

The current minimum wage in New Zealand stands at NZD 22.70 per hour. A recent adjustment in wage requirements for migrant workers, effective from February 27, 2023, aligns with the prevailing national median wage of NZD 27.76. This pertains to individuals under the Accredited Employer Work Visa (AEWC), residence visa categories, and occupations listed in the green list.

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Annual Leave

Workers are eligible for a paid annual leave of four weeks after completing a year of service, and any unused leave will be remunerated upon the termination of employment. Accumulated unused leave can be carried forward. For fixed-term employees with contracts lasting less than 12 months, they receive 8% holiday pay instead of the standard four weeks of leave.

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Paid Sick Leaves

The Holidays Amendment Bill in New Zealand has increased the minimum sick leave entitlement from five to 10 days annually for employees with six months of continuous employment. Employees can carry over a maximum of 10 unused sick days each year, capped at 20 days in total. This applies to all types of employees, including casuals, after six months of continuous employment or meeting specific weekly and monthly hour criteria. Sick leave entitlement is not prorated.

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Maternity leaves

In New Zealand, primary carer leave, equivalent to maternity leave, is granted to female employees expecting a baby, their spouses or partners, and those assuming primary responsibility for a child under six years, typically through adoption (excluding foster care or temporary arrangements). The employee, or their chosen partner, is entitled to 26 weeks of leave with payment up to a maximum of 661.12 NZD (from 1/7/2022 to 30/6/2023). The leave begins on the due date, the child's birth if born to the employee, or when the employee becomes the primary carer. It can commence up to six weeks before the baby's due date, or earlier with the employer's consent.

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Paternity leaves

In New Zealand, paternity leave is termed partners leave, allowing partners to take leave starting 21 days before the expected due date or when the employee's partner or spouse assumes primary caregiving responsibilities for a child under six. The leave concludes 21 days after the baby's birth, unless the baby is discharged from a hospital more than 21 days post-birth. In such cases, the partners leave concludes on the day of the child's discharge or when the employee's partner becomes the primary carer.

Employment laws, or labor laws, form a vital framework in New Zealand, safeguarding the rights of both employers and employees. These regulations address key aspects such as the minimum working age, working hours, minimum wage, paid holidays, sick leave, and overtime compensation, ensuring a fair and balanced workplace dynamic.

Tax and Social Security contribution:

Employer Payroll Contribution

Employee Payroll Contribution

Employee Income tax

The termination process is contingent on the terms outlined in the employment or collective agreement and is influenced by the contract type and the grounds for termination. Except in cases of gross misconduct, employers must give adequate notice before terminating an employment contract.

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Severance Pay

In most cases, severance pay is not mandatory unless it involves redundancy.

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Notice Period

An employee desiring to end their employment must provide adequate notice, the duration of which is stipulated in the employment agreement and typically ranges between two and four weeks. If the agreement lacks a specific notice clause, the employee must give what is deemed 'reasonable notice.' The length of 'reasonable notice' depends on various factors, including the reason for termination, the employee's tenure, seniority, or compensation package, customary practices, industry norms, and the employee's ability to secure alternative employment.

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Probation period

Usually, the probationary period extends for a maximum of 90 days.

Expanding your global workforce comes with many compliance challenges, from employment laws to data protection and diversity requirements. At Gloroots, we streamline this process with a unified platform. Our experts handle everything from employment contracts to on-time payments and compliant benefits. This way, you can concentrate on talent acquisition while we ensure a stress-free global employment experience for both you and your employees. Connect with our experts today to kickstart your global hiring journey.

Expand your team in New Zealand, a country with significant economic activity in cities like Auckland, Wellington, and Christchurch. The demand for skilled professionals is increasing, particularly in technology, IT engineering, digital innovation, and business management sectors. Whether you're looking to enhance your workforce in the thriving tech industry or seeking experienced professionals to lead and drive your operations, New Zealand offers many opportunities.

Effectively navigating New Zealand's unique business landscape and meeting specific skill requirements can be easily achieved by partnering with Gloroots. Their local expertise ensures a seamless recruitment process, adherence to regulatory requirements, and successful integration into the New Zealand market.