Table of Contents

New Zealand

Table of Contents

Currency

New Zealand Dollar (NZD)

Payroll Frequency

Weekly, Bi-Monthly, Monthly

Employer Taxes

4%

About New Zealand

The Polynesian Maori reached New Zealand in about A.D. 800. In 1840, their chieftains entered into a compact with Britain, the Treaty of Waitangi, in which they ceded sovereignty to Queen Victoria while retaining territorial rights. That same year, the British began the first organized colonial settlement. A series of land wars between 1843 and 1872 ended with the defeat of the native peoples. The British colony of New Zealand became an independent dominion in 1907 and supported the UK militarily in both world wars. New Zealand’s full participation in a number of defense alliances lapsed by the 1980s. In recent years, the government has sought to address longstanding Maori grievances. New Zealand assumed a nonpermanent seat on the UN Security Council for the 2015-16 term.

Employment Relationship

• Permanent Employment

Permanent employees in New Zealand are those who have a full set of employment rights and responsibilities. They are entitled to parental leave, parental leave payments, annual leave, sick leave, and bereavement leave. They can be full-time or part-time workers. Full-time permanent employees work for the standard number of working hours over five days per week. Part-time permanent employees are those who regularly work at a lesser number of hours or days per week. 

• Fixed-Term or Specific-Purpose Contracts

Fixed-term employment contracts can be formed in New Zealand. These agreements end at a specified date, on the occurrence of a particular event, or at the conclusion of a specific project. There are no limits on the duration of fixed-term contracts. Employers must have genuine reasons based on reasonable grounds to hire fixed-term employees. Additionally, the conditions of termination of fixed-term employment contracts must be specified in employment agreements. Fixed-term employees have the same employment rights and responsibilities as permanent employees. If an employer wants to dismiss a fixed-term employee before the specified end date or before the particular event occurs, the regular process for permanent employees must be followed, and there must be a legal reason for the dismissal, such as gross misconduct.  Fixed-term contracts cannot be concluded to exclude or limit employees' rights or to establish the suitability of the employee for permanent employment.

• Temporary Employment Contratcs

In New Zealand, employers can hire temporary employees through agencies. These workers are employees working under a triangular employment contract. They are employed by an employer (the agency) but work under another business or organization that directs or controls their day-to-day work (the controlling third party). Under a recent amendment to the Employee Relations Act, temporary employees in a triangular contract can take a personal grievance against the controlling third party and their direct employers. The law also recognizes casual employees hired on a short-term basis for no guaranteed work hours, no regular work pattern, and no ongoing expectation of employment. Every time the employee accepts an offer of work in this arrangement, the engagement is treated as a new employment period. A casual employment agreement must outline the details of an employee’s work hours, making clear that there is no guarantee of work on a specific day and that the amount of work will fluctuate.

Probationary Period

An employer may require an employee to serve a probationary period after joining. This must be specified in the employment contract. A probationary period is used to assess an employee's skills in a new job or role (if they are already working for the employer). There are no limits on the duration of probationary periods. If the employer finds the employee's work unsatisfactory at the end of the probationary period, they can dismiss the employee by providing justified reasons. They must give notice before dismissal. Employees have the right to challenge dismissal after probation on the grounds of unjustified dismissal. New Zealand also allows "trial periods" in certain cases. An employer with 19 or fewer employees can use a trial period of up to 90 days as long as this requirement is agreed to in the written employment agreement before the employee starts work. From December 2023, the provision for 90-day trial period has been extended and is available to all employers irrespective of the number of employees An employee cannot be on a trial period if they have previously worked for the employer. An employee dismissed during the trial period cannot bring a personal grievance for unjustified dismissal or other legal proceedings about their dismissal if given appropriate notice. The employer doesn't have to give dismissal reasons during a trial period or provide the employee a chance to comment before the dismissal. Employees on a trial period cannot be put on probation later.

Working Hours

Working hours are determined by employment contracts, but they must not exceed 40 hours per week (excluding overtime). If the maximum number of hours is less than 40, then the work must not exceed five days a week. Employees under 16 years of age cannot be employed between 10:00 PM and 6:00 AM on any day. If an employee or employer wants to change work hours, both should agree to this in writing in the employment agreement. Under special circumstances, working hours can be increased by giving reasonable notice to employees. Working hours may be reduced as an alternative to redundancy in some situations, such as genuine financial, commercial, or economic problems or genuine business restructuring.

Holidays / PTO

• Statutory Holidays

• Paid Annual Leave

In New Zealand, employees are entitled to a minimum paid annual leave of four weeks. Employees become eligible for this leave once they have completed 12 continuous months of service for the employer. Once the employee completes 1 year of service, employers can choose to grant them all of their annual leave at once, or they can allow the employee to accrue leave as they work so that it adds up to 4 weeks at the end of each year. Annual leave must be taken within 12 months after the date on which the employee becomes entitled to leave. An employee may request that their employer pay out a portion of the employee's entitlement to annual leave. This request must be made in writing and can be made for a maximum of 1 week a year. Annual leave is paid at either the employee's ordinary weekly pay at the beginning of the annual leave or the employee's average weekly earnings for the 12 months just before the end of the last pay period preceding the annual leave, depending on whichever is higher.

• Sick Leave

All employees (including part-time and casual employees) are entitled to five days of sick leave if they have worked for 6 months for the same employer. For each 12-month period after this, each employee gets at least 5 days of sick leave. Employees must inform their employers of sick leave as soon as possible. Proof of sickness is required if the employee is sick or injured for more than 3 consecutive days. Sick leave is paid at the employee's normal wage rate. Unused sick leave can't be cashed-up or be part of any final payment to the employee when they leave unless agreed to in the employment agreement. Unused sick leave can be carried over and added to the next year's entitlement, up to a maximum accumulated leave of 20 days. If an employee runs out of sick leave in a year, they can request advance sick leave, use annual leave or unpaid leave. 

• Maternity Leave

New Zealand does not have maternity leave. It provides different types of leaves that can be shared among partners under parental leave. Employees who have worked for an employer for at least 6 months are eligible for parental leave. The following types of leave are available at the time of a child's birth: Primary Carer Leave – This is a paid leave of 26 weeks duration available to a pregnant employer, her spouse, partner, or whoever is the primary caregiver for the child. The employee can start their primary carer leave up to six weeks (or earlier with the employer's consent) before the due date. All employees receive a government-funded payment of NZD 712.17 (New Zealand dollars) per week for 26 weeks. Special Leave – This is ten days of unpaid leave for pregnancy-related reasons such as antenatal classes, scans, or doctor/midwife appointments. Extended Leave – This is an unpaid leave of up to 52 weeks to be shared by both parents, depending on the number of months they have worked for their employers. Negotiated Carer Leave – This is an unpaid leave of 26 weeks for employees who have worked for less than 26 weeks with the same employer. Employees must inform their employers in writing of their intention to take parental leave at the time of a child's birth at least 3 months in advance. 

• Paternity Leave

In New Zealand, partners are eligible for unpaid partner's leave of one week if they have worked for 6 months with the employer and 2 weeks if they have worked for 12 months. This leave must be taken within the timeframe starting 21 days before the baby's due date and ending 21 days after birth. Employees must inform their employers in writing of their intention to take parental leave at the time of the birth of a child at least 3 months in advance. An employee cannot take a partner's leave in the following circumstances: She is the biological mother, and she has transferred her parental leave payment entitlements to her spouse or partner. The employee is the partner or spouse of the child's biological mother, and the biological mother has transferred her parental leave payment to the employee. A pregnant employee can also choose to transfer her 26 weeks of primary carer leave to her spouse or partner. In this case, the leave is to be taken continuously and immediately after childbirth. Such partners also receive the benefits of the primary carer leave and receive weekly benefits in the amount of NZD 712.17.

Termination of Employment

• Notice Period

There is no legal limit on notice for dismissal in New Zealand. A notice period is agreed upon in the employment contract. If the employment agreement does not have a notice period, fair and reasonable notice must be given depending on the years of service, role, type of job, and common practice in the industry. The notice period is usually 2 – 4 weeks. The notice must be given in writing and is usually the same for employees and employers. The employer can choose to agree with the employee to waive all or some of their notice period if the employee requests or consents to it. Payment in lieu of notice can also be made if it is in the employment agreement or is mutually agreed upon between the parties.

• Severance Benefits

There are no provisions for mandatory severance benefits in New Zealand. At the time of the contract termination, employees are entitled to a "final pay" that includes pending salary, allowance for annual leave and public holidays, and other payments owed to them. Employers can provide redundancy compensation if it is agreed upon in the employment agreement. If an employment agreement doesn't mention any such clause, an employee isn't legally entitled to redundancy pay. When employment is ending due to redundancy, employees must be given notice according to the contract terms.