Comprehensive Guide to Hiring Employees in New Zealand

Among the developed nations in the world, New Zealand is known for its free market-based economy. The country’s beauty and friendly culture are the primary reasons businesses prefer to set up hubs here. 

It holds the fourth position on the Index of Economic Freedom list. This makes hiring easier since businesses can access the needed resources easily. Moreover, it engages in trade with strong economies such as the USA, India, China, Japan, and its neighbor, Australia.

Over the years, the nation also had extremely low unemployment rates. Employers prefer hiring talent in New Zealand, given that the country offers a stable government, easy laws for company establishment, stable infrastructure, and good quality of life.

The hierarchy structure is not very rigid. There are fewer management layers employees must go through, and no overbearing regulations that a company setting business here must fulfill. New Zealand workplaces aim to get work done across the organization instead of being cooped into specific tasks. Employers would benefit from the go-getter attitude Kiwis have. 

This guide on recruiting employees and understanding the process in NZ will help you know the best practices.

Things to Know Before Hiring in New Zealand

Before hiring employees and initiating recruitment and selection in New Zealand, you must remember a few things. 

• Understand the Kiwi language and culture – The country’s official language is English, Maori, and New Zealand sign language. However, the first one is used widely and primarily for business. There are certain peculiarities around the Kiwi English used here that you must get a grip on. Understand the collaborative and fairly uniform work culture instead of trying to work based on hierarchy.
• Explore multiple recruitment strategies – Several companies work in New Zealand and hire staff. It would be convenient if an offshore employer hired an agency to handle recruitment. Try hiring across verticals using varied strategies.

• Anti-discrimination at the workplace – It is mandated not to indulge in any anti-discriminatory practice at the workplace or during hiring as per the Human Rights Act of 1993.

Employment contract

An employment contract in New Zealand must be a written document wherein an employee works under relevant employer supervision. The employees and employers must sign a contract that mentions all terms and conditions governing their work relationship.

The employment contract in New Zealand for every worker is drafted for 30 days at the outset, based on terms of the collective agreement. Post this period, the employer and employee can renegotiate terms of employment while the employee also offers, in writing, an intention or non-intention to join any trade union.

The main points mandatory to mention in a contract are-

Details of employer and employee

• Job description
• Workplace details
• Work hours
• Payment involved
• An explanation for employment-related problem resolution
• Employment protection clause for relevant employees
• The notice period, probation, and annual leave details are not compulsory but are mostly mentioned.

A copy of the contract remains with the employer, and one other is given to the employee.

Termination

There must be suitable and sufficient reasons for terminating employee service. An employer cannot order termination without due process.

• Notice Period: An employee’s notice period varies between two to four weeks, depending on the service. 

• Severance: Employers in New Zealand don’t have any legal entitlement to dismiss employees except in case of a special provision in an employment agreement.

Employment laws

When beginning the hiring process in New Zealand, you must be clued to its relevant employment laws.

• The Job employment Relations Amendment Act of 2019 is a significant legislation applicable to employment situations.
• The Employment Relations Amendment Act of 2018 also introduced noteworthy provisions related to employment laws for ensuring workplace fairness, decent conditions, and proper wages.
• The Employment Relations Act governs provisions related to work hours and breaks.

Working hours and breaks

When hiring staff in New Zealand, keep track of the applicable working hours and breaks.

• An employee cannot work more than 40 hours per week except for overtime. Any work outside of this bracket and days mentioned earlier is overtime work.
• As per the Employment Relations Act, employers must offer paid breaks of at least 10 minutes between work.

Payroll

• Once you establish a company and employ workers in New Zealand, you must set up a payroll system compliant with all mandated social contributions and tax withholding. Employers can opt for payroll management in-house or via an agency.
• Payments are made once a month in the form of salary, except in the case of daily/weekly payments.

Minimum wage

• Employers need to fix up salaries per the minimum wage in New Zealand. 
• The minimum wage in New Zealand is NZ$21.20 per hour.
• The minimum wage rate needs a review yearly, per the country’s rules.

Holidays for employees             

Official public holidays in New Zealand are listed below in order of month of occurrence-

Other Leaves

Vacation/Annual Leave

Once an employee completes a year of employment with an employer, the employee is entitled to annual leave of four weeks every year.

Bereavement Leave

New Zealand employees can take bereavement leave for the death of a near one, miscarriage, or even stillbirth.

Employees are entitled to 3 days of annual bereavement.

Parental Leave

Employees are entitled to parental leave of 52 weeks, including around 26 weeks of primary care-providing leave and 26 more weeks of extended leave. The first 26 weeks of leave are paid for.

Paternity Leave

Fathers are entitled to two weeks of unpaid paternity leave to assist their partner in caring for a newborn or adopted baby.

Sick Leave

Employees stand entitled to ten days of paid sick leaves every year.

Social security

• There is no social security scheme compulsory for employers or employees.
• There is a non-compulsory scheme for accident-related compensation that employers and employees contribute to in a proportion fixed per the associated risk of an accident. Employees pay 1.21% of the gross earnings.
• There is a voluntary scheme named KiwiSaver, wherein employers take out 3% of the employee’s salary.

Taxation

New Zealand follows a progressive rate of personal income tax, applicable as follows-

The Cost of Hiring an Employee in New Zealand

The recruitment fees in New Zealand are dependent on policies and procedures companies decide on while hiring in the country. Hiring employees in New Zealand might have hidden expenses that you need to take into account-

• Advertising costs
• Tax payments
• Salary and wages
• Bonuses and allowances
• Equipment and renting/leasing costs
• Training costs
• KiwiSaver contributions
• Fringe Benefit payments

What Does a Company Need to Hire Employees in New Zealand?

Employers in New Zealand can employ both permanent and part-time employees. As a new company, establishing a presence at the outset is essential, followed by meeting tax and legal compliances. Employers must complete these requirements for hiring as a business in New Zealand:

1. Certificate of Incorporation
2. Local account for banking
3. Employment contract
4. GST and Inland Revenue Number 

Various Options for Hiring Employees in New Zealand

Once you understand the laws and norms for recruitment in New Zealand, you must go ahead and start the hiring process. There are two main options for hiring in New Zealand, which are as follows-

1. Hiring EOR service: You may team up with an Employer of Record (EOR) for hire in New Zealand. It helps with logistics work, compliances, benefits, compensation, and workforce management.
2. Direct hire: If you have an HR department in place with relevant experience, initiate and finalize the hiring process.

The Steps to Hiring in New Zealand

Here is how the process for hiring in New Zealand works-

Step 1- Job advertisements

• Begin the hiring process in New Zealand by advertising any job openings on job boards, websites, LinkedIn, aggregator sites, and print media.
• You must mention all the job post requirements in the advertisement to maintain transparency. 

Step 2- Check applications and shortlist

• Go over the CVs you receive to shortlist those matching the requirements for a specific role.

Step 3- Schedule interviews

• The hiring team needs to set up interviews with the shortlisted candidates physically or virtually. 
• Understand the candidate’s competencies, asking questions about job post requirements. 

Step 4 – Background checks

• Once you have shortlisted candidates, you can conduct a pre-employment background check.
• Employers can -verify the references and background when the candidate consents.

Step 5- Final offer and onboarding

• This is the last step of the hiring process in New Zealand. Draft an employment contract that mentions all the working conditions and payments and what else is mandated.
• The employee must accept the offer letter before signing the employment contract. Employers may put the employee on a trial period of up to 90 days, provided this is mentioned and signed on the contract.
• The employer must onboard the employee to make sure the latter gets acquainted with the on-job role, duties and related contexts, as well as post-retirement benefits as applicable.

Let Multiplier be Your EOR Platform in New Zealand

Recruiting and hiring employees means a lot of hard work and compliance with local rules. This is why a reputed PEO-EOR entity such as Multiplier can help.

Experts at Multiplier will make any recruitment process in New Zealand quick and hassle-free. With the SaaS-based EOR provider of solutions, you get ample help in hiring talent. You do not need a subsidiary in the country, either. Multiplier helps you understand all norms for hiring-related processes, taxation and employee management to complete the hiring process in New Zealand.