Employee Benefits in New Zealand

New Zealand Employee Benefits

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In New Zealand, benefits are guaranteed by labor law and national legislation, as well as collective agreements with trade unions or workers’ councils.

As an employer, it is vital to understand what is guaranteed, as well as what can be open to negotiation when expanding into new territory. This is where Bradford Jacobs, a Professional Employer Organization (PEO) with years of expertise and knowledge on all facets of employment in New Zealand, can step in and help you out.

What Compensation Laws exist in New Zealand?

In New Zealand, compensation laws are set by the national legislation, known as the ‘minimum code’. However, the types of compensation can vary according to the sector the employees are in, regulations of applicable collective agreements, and the internal regulations of the company.

The benefits/compensation that are guaranteed by the minimum code include:

• National Minimum Wage: Minimum wage rates apply to all employees, regardless of the employment type. Employers aged 16 or over must be paid at least the adult minimum wage, unless they are starting out, or are in training. In these cases, the minimum wage rate is slightly lower. Employees and employers can negotiate the employment wage, as long as it not less than the national minimum wage.
• Wage Payment: Employers must pay their employees in cash or can be paid another way (cheque or direct credit), but this must be included in the written employment agreement.
• Work Hours and Breaks: Standard work hours in New Zealand are 8 hours daily, and 40 hours weekly. All employees are entitled to rest breaks, which consists of at least two 10-minute breaks and one 30-minute meal break. If the working hours are less, only one 10-minute rest break is included.
• Notice Periods: Depending on the role, the standard notice period is between 2-4 weeks. The terms and conditions of employee termination must be agreed to in the employee agreement.
• Termination and Severance: Employment contracts may be terminated through dismissal or resignation. In both cases, the notice period for termination must be met. In cases of serious conduct, an employee may be dismissed without notice. In terms of severance pay, the payment must include payment for all hours worked, payment for annual holidays, and any additional lump sum or other payments owing.
• Sick Leave: Employees are entitled to 5 days of paid sick leave after meeting 6 months of continuous employment. After the initial 5 days, an extra five days are added for every 12 months. Employers must pay their employees their relevant daily pay or average daily pay. Employer may also request proof of illness, such as a medical certificate.
• Holiday & Annual Leave: At the end of each year of continuous employment with any one employer, the employee is entitled to 4 weeks paid annual leave. Employees can request to cash-up one week of their annual holidays each year, in writing.  Employees are also entitled to at least 11 paid public holidays.
• Maternity Leave: Known as ‘Primary Care Leave’ in New Zealand, mothers are entitled to 26 weeks of maternity leave, and are paid between $177-$585.80 by the government per week. Mothers who suffer from a miscarriage or stillbirth are also entitled to three days of paid leave.
• Paternity Leave: Known as ‘Partners’ Leave’ in New Zealand, a spouse or partner is given one week of unpaid leave after six months of employment, and two weeks of unpaid leave after 12 months of employment. This leave can be taken any time within the period of 21 days before or after the birth.
• Parental Leave: Parental Leave in New Zealand is comprised of primary care leave, special leave, partners leave, extended leave, and negotiated career leave. Special Leave consists of 10 days of unpaid leave that are given for pregnancy-related appointments. Negotiated Career Leave allows employees who do not qualify for primary care leave to care for their child and receive parental leave payments. Extended Leave consists of unpaid leave given to parents, which depends on the amount of time an employee has worked – 52 extra weeks can be taken for a parent who has been employed for at least 12 months, and 26 weeks for a parent who has been employed for at least 6 months. However, 26 weeks of parental leave payments are government funded, paid for by the Inland Revenue Department, even if they do not qualify for unpaid parental leave by their employment.

Employer Statutory Costs in New Zealand

Statutory Costs in New Zealand include meeting the standard employee wages, withholding employees’ income taxes to pay the tax authorities, and payments to the KiwiSaver funds.

Employers must at least meet the minimum wage (adult, starting out, or training, but this also depends on the employee’s qualifications and position), and ensure payment monthly, or bi-weekly.
Employers must also ensure that the necessary payments from their wages to the local authorities are made on time, which include:

• Income Tax – This is to be withheld from the employee every month and paid by the employer monthly to the local tax authorities. Income Tax in New Zealand is progressive, depending on the employee’s income.
• KiwiSaver – Employers must make their own contributions to the KiwiSaver funds (when employees have chosen to take part), besides withholding employees’ contributions.