New Zealand Labor Law Guide for Hiring Employees and Contractors
In 2023, New Zealand’s economy continued to grow steadily, with a GDP of approximately USD 240 billion. The country’s economy is diverse, with key sectors including agriculture, manufacturing, tourism, and services, particularly finance and technology. The country’s currency is the New Zealand Dollar (NZD).
Minimum Wage
NZD 23.15 per hour
Overtime Wage
1.5 times the regular hourly rate
Meal Breaks
30 minutes
Rest Breaks
Two 10-minute breaks
Working hours
8 hours per day, 40 hours per week
Salary Payment Cycle
Weekly, bi-weekly, or monthly
Payroll Taxes
Pay As You Earn (PAYE) tax, KiwiSaver, ACC levy
Paid Vacation
20 days
Overtime Hours
Beyond 40 hours per week
Night Shift Hours
1.25 to 1.5 times the regular hourly rate, depending on the industry
Holidays
11 days
No Work Days
Typically Saturday and Sunday
Businesses looking to hire employees in New Zealand must be registered locally and obtain a New Zealand Business Number (NZBN). The cost of setting up a business entity can vary depending on the structure, typically ranging from NZD 150 to NZD 1,500, with the process taking approximately 1 to 3 weeks.
Employers are required to provide a written employment agreement to all employees, which should outline job responsibilities, salary, working hours, benefits, and conditions for termination. The agreement must comply with the Employment Relations Act 2000 and include clauses such as the duration of employment, dispute resolution, and confidentiality where applicable.
In New Zealand, labor laws clearly differentiate between employees and independent contractors. Employees are entitled to specific rights and benefits under the law, while contractors operate under different terms, often without the same entitlements, making it crucial to define the working relationship in the contract.
New Zealand enforces a national minimum wage, which as of 2024 is NZD 23.15 per hour. This rate applies to all full-time, part-time, and casual employees. However, certain groups, such as trainees or young workers (aged 16-19 years) under the “Starting-Out” wage scheme, may receive a lower minimum wage.
There are no regional variations in the minimum wage, so the rate is consistent across the country. Employers are also required to pay employees extra for working on public holidays, typically at a rate of 1.5 times the regular pay, plus a day off in lieu.
Standard working hours in New Zealand are 8 hours per day and 40 hours per week. Any hours worked beyond this threshold are considered overtime and must be compensated at 1.5 times the regular hourly rate.
Night shifts usually attract a higher pay rate, ranging from 1.25 to 1.5 times the regular hourly rate, depending on industry agreements. The minimum age for employment is 16 years, and New Zealand has strict laws against child labor, ensuring that young workers are protected.
Employers in New Zealand are required to deduct Pay As You Earn (PAYE) tax from employees’ salaries, which is the income tax paid on wages. In addition, employers must contribute to the KiwiSaver retirement savings scheme if the employee is a member and pay the Accident Compensation Corporation (ACC) levy, which funds workplace injury insurance.
New Zealand’s income tax system is progressive, with tax rates for 2024 as follows:
Income Level (NZD) | 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% |
Employers must ensure these deductions are accurately calculated and remitted to the Inland Revenue Department (IRD).
Employees in New Zealand are entitled to a variety of leave types, including annual leave, sick leave, and parental leave. Full-time employees are entitled to 20 days of paid annual leave after one year of continuous employment.
Parental leave is available to eligible employees, allowing up to 26 weeks of paid leave for primary caregivers and an additional 26 weeks of unpaid leave. Sick leave provides a minimum of 10 days per year, which can be accumulated up to a maximum of 20 days.
Public holidays are also mandated by law, with the following table listing the public holidays for 2024:
Holiday Name | Date |
New Year’s Day | January 1 |
Day After New Year’s Day | January 2 |
Waitangi Day | February 6 |
Good Friday | March 29 |
Easter Monday | April 1 |
ANZAC Day | April 25 |
Queen’s Birthday | June 3 |
Labour Day | October 28 |
Christmas Day | December 25 |
Boxing Day | December 26 |
Matariki (Māori New Year) | June 28 |
Employers in New Zealand must provide various benefits to their employees, including contributions to the KiwiSaver retirement savings scheme and paying the ACC levy for workplace injury insurance. Healthcare benefits are provided through New Zealand’s public healthcare system, which is funded through taxes and the ACC.
Employers may also provide additional benefits such as annual bonuses, health insurance, and other incentives as part of individual or collective employment agreements.
New Zealand does not follow “At-Will Employment” laws. Employment termination must comply with the Employment Relations Act 2000, which requires that employers have a valid reason for dismissal and follow a fair process. Reasons for termination can include misconduct, redundancy, or poor performance.
The notice period for termination generally ranges from one to four weeks, depending on the employment agreement. In cases of redundancy, employees may be entitled to redundancy pay if stipulated in their employment contract.
Employees who believe they have been unjustly dismissed can challenge the termination through the Employment Relations Authority, which can order reinstatement, compensation, or other remedies. Legal grounds for termination include gross misconduct, consistent underperformance after warnings, and operational requirements leading to redundancy.