Expanding your business to New Zealand offers numerous opportunities, including access to a highly skilled workforce and a stable economy. However, hiring employees in New Zealand can be complex due to local labor laws, tax systems, and compliance requirements. Establishing a local entity involves setting up a physical office, registering as a subsidiary, and navigating regional payroll, tax, and HR laws. This process can be time-consuming and expensive.

Fortunately, partnering with an Employer of Record (EOR) in New Zealand simplifies the process. An EOR allows your business to hire employees in New Zealand quickly and compliantly without needing to establish a local entity. They manage everything from payroll and benefits to HR compliance, enabling you to focus on growing your business.

5 Steps to Hiring in New Zealand Using an Employer of Record

Here’s how you can streamline the hiring process in New Zealand with an EOR:

Step 1: Select a Reliable EOR Partner
Begin by evaluating your business needs and researching EOR services that align with your goals. Different providers offer varied services, so it’s essential to compare them based on factors like compliance expertise, cost, and client support.

Step 2: Prioritize Compliance and Security
Choose an EOR that emphasizes compliance with New Zealand’s labor laws and data security. Ensure they have robust systems in place to protect your business’s and employees’ data, as well as to manage tax and legal obligations.

Step 3: Enhance Employee Experience
Your chosen EOR should provide a seamless experience for your employees, from onboarding to payroll management. Look for features like automated tax document collection, streamlined payroll systems, and access to competitive local benefits.

Step 4: Verify Customer Reviews and Testimonials
Before finalizing your EOR partner, check reviews and testimonials. Reliable feedback can be found on the EOR’s website, third-party review platforms, or by directly contacting their clients.

Step 5: Design a Competitive Compensation Package
Work with your EOR to craft a compensation package that aligns with New Zealand’s labor market standards, considering factors like minimum wage, benefits, and statutory leave.

What Are the Benefits of Using an Employer of Record in New Zealand?

Using an EOR in New Zealand offers numerous advantages, especially for businesses looking to expand without establishing a local office. Key benefits include:

• Compliance with Local Labor Laws: EORs ensure adherence to New Zealand’s labor laws, including employment contracts, payroll, and employee benefits.
• Cost-Effective Expansion: Avoid the costs and complexities of setting up a local entity by leveraging an EOR’s existing infrastructure.
• Streamlined HR Management: EORs handle all HR-related tasks, from onboarding to managing payroll and employee benefits, allowing you to focus on core business activities.
• Fast Onboarding: With an average onboarding time of just 2 days, an EOR can help you get your team up and running quickly in New Zealand.

Payroll and Taxation in New Zealand

Understanding the payroll and tax landscape in New Zealand is crucial for any business looking to hire employees there. An EOR can manage the following:

Payroll Cycle:
Employees in New Zealand are typically paid on a monthly basis.

Minimum Wage:
As of April 1, 2024, the minimum wage in New Zealand is NZD 23.15 per hour. For training and early employment, the rate is NZD 18.52 per hour.

Individual Income Tax:
Income tax in New Zealand is progressive, with rates ranging from 10.5% to 39%, depending on the employee’s income. The rates are adjusted based on income brackets, which change periodically.

Employer Contributions:
Employers in New Zealand must contribute to their employees’ KiwiSaver (a retirement savings scheme) and the Accident Compensation Corporation (ACC) levy. The combined employer contribution is generally around 3.21% of the employee’s salary.

Overtime and Working Hours:
Overtime pay is not mandatory in New Zealand, but work done on public holidays must be compensated at 150% of the regular hourly rate. The standard workweek is 40 hours, typically spread over five days.

Employee Benefits and Compensation in New Zealand

Using an EOR, you can provide your employees with a comprehensive benefits package that complies with New Zealand’s regulations. Typical benefits include:

• Holiday Accrual: Employees are entitled to 20 days of paid leave annually.
• Pension Contributions: Employers contribute to employees’ KiwiSaver accounts.
• Work Accident Insurance: Coverage under New Zealand’s ACC system.
• Optional Private Healthcare: Additional health coverage can be provided through options like Unisure or Allianz.

Termination and Severance in New Zealand

Probationary Period:
Employees can be placed on a probationary period, typically lasting up to 90 days. During this time, either party can terminate the contract without extensive notice.

Notice Period:
The required notice period for termination varies depending on the employee’s contract and length of service. However, it generally ranges from one to four weeks.

Severance Pay:
While New Zealand does not have a statutory requirement for severance pay, it is often negotiated as part of the employment contract.

Risks of Employee Misclassification in New Zealand

Misclassifying employees as contractors can lead to significant legal and financial repercussions in New Zealand. Employees are entitled to various protections and benefits that contractors are not, including minimum wage, leave entitlements, and severance pay. An EOR can help you navigate these complexities, ensuring that all workers are correctly classified and compliant with local laws.

Get Started with an EOR in New Zealand

Expanding your business into New Zealand is a strategic move, but it comes with its challenges. By partnering with an Employer of Record like Stipenda, you can simplify the hiring process, ensure compliance with local laws, and provide your employees with the best possible experience.

Ready to hire in New Zealand? Contact us today to learn how Stipenda can support your global expansion efforts.

For any sales inquiries, feel free to reach out to us:

Europe: +44 (0) 330 380 0161
US: +1 800 910 7847
Email: sales@stipenda.com