With an attractive balance of labor costs and work quality, advantageous business incentives, competitive tax system, and investment-friendly economic policies, New Zealand is a formidable international expansion option that is ripe with opportunity for foreign companies and entrepreneurs.
New Zealand visa and permit regulations require expert guidance as they vary according to the zones foreign nationals reside in – Australia, Asia, The European Union, and other outside zones are all affected by these regulations.
Companies entering New Zealand’s market will find processing work permits and visas a major issue. Acquiring these documents, as well as implementing your employees in a new territory (both foreign and domestic) require an in-house specialist department – and every new country comes with its own demands.
Few companies, however, have the resources or the time. But at Bradford Jacobs, as a Professional Employer Organisation (PEO) with years of experience in Employer of Record (EOR) services, we have plenty of both. We are experts in New Zealand recruitment and payroll and can ensure an employee’s swift implementation in New Zealand with the correct visa and permit documentation.
What Types of Work Visas, and Permits for New Zealand are there?
For a foreign national to enter New Zealand in order to work, there are a number of visas one can apply for:
Working Holiday Visa – allows people from many countries to work in New Zealand for up to a year, or up to 23 months for people from the UK and Canada. Best for those who would like a temporary stay in the country.
Essential Skills Visa – allows people to move to New Zealand temporarily to work for a specific employer and is best for those who have been offered full-time work and might want to move to New Zealand. This visa is also tied to a specific job.
Work to Residence Visa – a work visa that also serves as a pathway to residence after this visa has been held for over 24 months and is best for those who have been offered full-time work and wish to settle in New Zealand. It is tied to a specific job in an area of skilled shortage, or with an accredited employer.
Skilled Migrant Visa – is both a work and residence visa for those who wish to migrate to New Zealand, and have been offered a job with the skills, qualifications and experience needed but that have not been found locally.
Investor Visa – For those who wish to invest into the New Zealand lifestyle and must invest a minimum of NZ$ 3 million to be eligible, as well as meet other criteria, and is valid indefinitely once approved.
Entrepreneur Visa – For those who wish to establish a business in New Zealand, which is valid for 3 years.
NZeTA – Some visitors may travel to New Zealand without a visa or if they are from a country that does not require a visa with an NZeTA. It allows an individual to travel to New Zealand for many visits within two years.
With over 20 years’ experience, Bradford Jacobs is a leading international payroll provider. Our expertise in payroll and tax supports our work and helps us manage complex regulations facing companies wishing to expand into New Zealand.
New Zealand is established as one of the world’s top places to start a business due to its economic stability and its potential for growth. The country boasts a great work-life balance, lenient tax rates, low workforce costs, and a supportive startup community.
Dealing with tax matters is a major issue for companies seeking to develop an international presence, particularly as disciplinary measures can apply for non-compliance.
Tax, and especially overseas tax, can be complicated. The table below provides an overview, and this guide will explain the tax rates and administration concerning New Zealand Tax.
Overview of Taxes in New Zealand
Tax Type: Percentage
Individual Income Tax: Progressive: 10.5-39%
GST (Goods & Services Tax): 15%
Corporate Income Tax: 28%
Employer Social Security Contributions: 3-10% (Employee) 3% (Employer)
New Zealand Individual Tax – Single, Married
In New Zealand, an individual’s liability to pay income tax is determined by their residency, as well as the source of their income. Residents are taxed on their worldwide income, whilst non-residents are subject to tax only on income from sources in New Zealand.
Income derived from employment activity performed in New Zealand is considered as domestic-source income, even if it is paid from abroad – in these cases, income tax is still due.
Taxable income includes:
Income from salaries, wages, or self-employed work
Benefits and student allowances
Assets and investments such as KiwiSaver and rental income
New Zealand’s tax system is based on self-assessment – individuals’ income tax is normally withheld by employers and paid directly to the Inland Revenue Department (IRD) monthly on the employees’ behalf.
However, individual tax returns are still required, and the following tax forms are sent to the individual to confirm or modify the tax assessments for the previous year – a tax assessment form, a request to confirm or provide new information about your income, as well as a message to complete an individual tax return (which can be received by post or online via myIR).
Personal income tax is paid at a progressive rate, depending on the amount of income being earned:
Setting up an entity in a foreign territory can be difficult and comes with many complexities and requirements. In New Zealand, foreign subsidiary entities hold the same company standing as any other conventional company in the country and are treated as equals with domestic businesses. They enjoy independence from their parent company and are subject to all national laws of New Zealand.
The registration process comes with some variation (depending on the company type), but it is generally straightforward and can be done with little difficulty. Once that is done, however, setting up a subsidiary in New Zealand involves a heavy workload.
Tax processing, filing accounts, law compliance, workforce management, payroll, recruitment… all these matters must be managed effectively, which can eat up your time, money, and resources.
You can lighten this load by partnering with Bradford Jacobs, an Employer of Record (EOR) company. We use our Professional Employer Organisation (PEO) international recruitment specialists to obtain your new personnel, and our EOR experts handle all legal and compliance requirements.
How to set up a New Zealand Subsidiary
Decide on the company type that suits the nature of your business, your business goals and matches your capabilities to meet establishment requirements.
Common company types include a Limited Liability Company, a Public Limited Company, a Sole Trader/Proprietorship, The Limited Partnership, a branch office, a representative office, and a trust.
Acquire a RealMe login for company incorporation, as well as an online services account.
Obtain a business address in New Zealand and prepare the documents for registration.
Open a local bank account in New Zealand and deposit the appropriate share capital.
Prepare the appropriate registration documents and have them translated to English.
Appoint one resident director for company incorporation.
Reserve the company name.
Notarize and legalize the registration documents at a notary’s office.
Register your company at the Companies Office.
Register all directors and shareholders with the Companies Office within 20 days of incorporation.
Company details will be made available on the Companies Register.
Register company for a Goods and Services Tax, an Inland Revenue Number and as an employer.
Register with the KiwiSaver funds.
Receive a Certificate of Incorporation, an Inland Revenue Number, and a Good and Services Tax number.
Acquire the necessary commercial licenses to start operations.
Benefits of setting up a Subsidiary in New Zealand
New Zealand is one of the best business destinations in the world, with many benefits to establishing an entity, which include:
Subsidiaries in New Zealand are taxed the same as any other resident company.
New Zealand is ranked first in the world for Ease of Doing Business, according to the World Bank Report (2020).
Subsidiary entities in New Zealand also benefit from double tax treaties, in which withholding tax payments to foreign residents and companies are significantly reduced or exempted, depending on the treaty.
New Zealand boasts a strong economy, with its strongest industries being agriculture, construction, and tourism.
Businesses can enjoy access to large markets in Asia, with over 70 per cent of New Zealand’s exports are to Asia-Pacific countries. Many goods and services also enjoy preferential access to these markets.
New Zealand placed 5th out of 160 countries for business friendliness, according to Forbes Best Countries for Business (2019).
New Zealand also has a world-class education system, with their universities placing in the top 3% globally, according to the QS World University Rankings (2021).
New Zealand places high value on innovation, with many of the companies established in the country making their sectors stand out both locally and globally. Particularly, sectors such as food and beverage, wood processing, advanced transportation, technology, and tourism have all been affected, producing top-quality products and services for world markets.
Foreign companies and investors who wish to expand into New Zealand will be met with a world-renowned market that focuses on innovation, globalization, and high-quality, large-scale products. The country offers a highly skilled, diverse, and educated workforce, attractive cuts on withholding tax payments, and robust support from the state.
New Zealand’s position offers access to markets in Asia and the Pacific, which adds up to an influence of over 5 billion people. With strong sectors such as retail, agriculture, tourism, and finance, and flexible administration duties, this creates an attractive environment for any business owner seeking to expand their business.
However, setting up shop in an unfamiliar place comes with its own challenges. Foreign businesses must comply with employment, tax, payroll, and corporate legislation whilst ensuring that their employees are working productively and efficiently.
Starting a business in New Zealand
To start a business in New Zealand you must go through a company registration procedure, which is straightforward and designed to be executed easily. These steps can be done online through the one-stop-shop Companies Register website or in person.
However, there are other tasks that need to be done before registering the company, as well as after incorporation but before operations can begin:
Obtain a local business address.
Open a local bank account in New Zealand and deposit the appropriate share capital.
Prepare the appropriate registration documents and having them translated to English (if needed).
Notarizing and legalizing the registration documents at a notary’s office.
Register all directors and shareholders with the Companies Office within 20 days of incorporation.
After incorporation, register the company for a Goods and Services Tax, an Inland Revenue Number and as an employer.
Register the company for a commercial license, if one applies, before beginning operations.
Register with a KiwiSaver fund provider.
Expanding Business into New Zealand
Foreign companies that wish to expand into New Zealand will be met with a thriving economy that is accompanied by a highly educated workforce, attractive administration costs, and low withholding taxes, which are provided to all companies in the market. The country’s location offers business with easy to trade with Australia and the Asian Pacific, which accounts for over 4.5 billion people.
New Zealand boats of a formidable economy, with robust sectors such as agriculture, scientific and technical services, and construction. However, the services industry is the strongest, contributing over 65% of the country’s GDP.
When looking to expand to New Zealand, it is best to go to cities which can offer a large customer base and the infrastructure for importing and exporting the materials you need, as well as connections. Popular cities that offer both things include Auckland, Christchurch, Wellington, Hamilton, Tauranga, and Lower Hutt.
Leading sectors – Agriculture, Forestry, Horticulture, Seafood, Tourism, Finance
Main exports – Dairy products, meats, logs, wood products, fruit, machinery and equipment, wine, fish, and seafood
Main imports – Vehicles and aircraft, machinery and equipment, petroleum, electronics, textiles, and plastics
Main trading partners – China, Australia, United States, Japan, South Korea, United Kingdom, Taiwan, Hong Kong, Indonesia, Singapore
Government – Unitary parliamentary constitutional monarchy
Currency – New Zealand Dollar (NZD)
Advantages and Challenges of the Mexican Market
The market of New Zealand has a variety of significant advantages:
Low employer costs: Labour costs are significantly low in New Zealand for employers, with only voluntary KiwiSaver funds to be paid.
Tax advantages: Taxes in New Zealand can benefit from tax reductions and exemptions, and businesses can choose the month they have to file their tax returns.
Education and healthcare: Hungary’s workforce boast world-renowned education, and most workers also benefit from a free or highly subsidized high-quality healthcare services.
Language: The local workforce is multilingual, but the main language for business is English.
Ranking: New Zealand ranks 1st in the Ease of Doing Business Survey.
Location: New Zealand’s location offers access to over 5 billion people in the Asia Pacific.
The biggest challenge facing New Zealand’s market currently is the effects of COVID-19, like many other nations around the world. Other challenges include high logistics costs, challenging tax filing procedures, and strict regulations on importation and exportation standards.
The 100 per cent solution is to consider the alternative to setting up a subsidiary by working with Bradford Jacobs. Our Professional Employer Organisation (PEO) international recruitment specialists will find the perfect fit for the roles you need to fill. Then our Employer of Record (EOR) in-country consultants will handle all the complexities of New Zealand’s employment laws, tax regulations and payroll, ensuring your New Zealand expansion plans progress smoothly and effortlessly.
Limited Company / Subsidiary or Branch in New Zealand? A subsidiary established in Newland is considered a separate legal entity from the parent company, with independent administration and management, providing freedom explore the local market and create international credibility.
A branch, however, does not have any independence from the parent company, but it is taxed and reported similarly to resident entities, and is limited in its commercial activities.
If a foreign company is looking to hire resident employees as part of their expansion into New Zealand, they must comply with recruitment regulations such as tax, social security contributions and local employment laws, as well collaborate with or adhere to any collective bargaining, trade unions or work council agreements.
In New Zealand, employment relationships must be concluded in written employment contracts. There are three types of employment contracts – the individual contract, the fixed-term contract, and the collective agreement contract.
National legislation is the main source of employment law in New Zealand, which governs employment conditions, benefits, and health and safety regulations, and protects the basic rights of both the employers and employees. The conditions of labor legislation that are performed may vary according to the industry and sector – so it is best to confirm with the Ministry of Business, Innovation and Employment on what regulation applies.
Labor law in New Zealand is based on both employer and employee protection. To be fully aware of what you can and cannot apply to your employment practices in New Zealand, it is important for the employer to know the existing labor laws and employee entitlements, as well as collaborate with the appropriate local employment organizations.
Employment Contracts in New Zealand
In New Zealand, an employment contract, or employment agreement, must be concluded in writing. The agreement could either be a collective agreement (which is between employees, employers, and unions), or an individual contract (which is between an employee and employer), which can be indefinite or fixed term. Here are the conditions of each agreement:
An individual contract – an individual contract is the best type for employees that are not involved a trade union or collective agreement, or where one is not involved and must be treated as an individual. This type of employment agreement must include:– personal information (names, contact numbers, etc.) of both the employer and the employee
– a description of the employee’s work to be performed
– the place of work and the agreed hours of work
– the wage rate or salary, and the payment process
– information/guidance on how to resolve workplace relationship problems, such as advice that personal grievances must be raised within 90 days
– statement of public holiday payments (if needed), which must be at least normal working rates and a half (150%) for work done on those days
– protection in cases of restructuring
Fixed-term employment contract – Fixed term agreements are practiced but are only allowed if there is a genuine reason. They must be based on justifiable grounds for having a fixed employment term and the employer must inform you of this reason before employing you, as well as how and when your employment will end.The conditions to be included in the fixed-term employment agreement are to be the same as the individual agreement, and the rights of fixed-term employees are the same as permanent employees, but the agreement type must include:– an explanation of why the role is only for a fixed term
– a specification of when the agreement ends
Collective agreements – A collective employment agreement covers two or more employees and are negotiated by the employer and a trade/workers’ union on the employees’ behalf. This type of agreement may involve more than one employer as well as more than one union.For an employee to be covered by a collective agreement, their job must be included or within the scope of the agreement, and they must be a member of the union that negotiated it. A new employee being covered by a collective agreement will have the minimum terms and conditions set out in their employment agreement/contract. As an individual, they can negotiate additional terms.The following terms must be included in the collective agreement:
– the type(s) of work or group of employees that the agreement covers
– the wage/salary rates that are payable to the employees being covered by the agreement
– a clause which states that employees should be paid at least time and a half during work done on public holidays
– services for resolving any employment relationship issues or problems
– a clause explaining how the agreement may be amended
– a clause stating the end of the validity of the agreement, or the event that will bring about the agreement’s end
-a clause known as the ‘prospection of restructures’, which applies for most industries – it must state how the employer must protect the employees in the case of business restructuring
Minimum employment rights must be complied with, even if they are not included in the employment agreement or if the contract states conditions that are less than the minimum entitlement. Any changes to the employment contract must be agreed to by both parties, and the employer cannot make any changes without the employee’s consent.
Employers are obliged to keep a copy of the employment agreement or the current signed document containing the terms and conditions of employment. The employer must also keep a copy of an intended agreement, even if the employee has not signed it. Employees are entitled to a copy of their employment agreement upon request. Failure to guarantee the employment agreement is in writing will result in government fines of NZ$1,000 for each employee.
There is also a 30-day period for new employees concerning employment agreements. For the first 30 days of employment, new employees are to be employed under the terms that are consistent with the with the applicable employment agreement if one is in place. Both parties may also agree on additional terms that are more favorable than those in the collective agreement. After the 30-day period has expired, the employee and employer must come re-negotiate and agree on different terms and conditions on the individual employment agreement. However, if the employee has joined the trade union that has helped negotiate the terms of the collective agreement, the reconvening does not need to take place.
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 Organisation (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.
Recruitment can be a tricky business, especially when a company is venturing to unfamiliar countries and exploring new markets. This is where you need a specialist to come in oversee the process for you – Bradford Jacobs’ expertise and over 20 years of experience the in international recruitment services is indispensable for expansion into New Zealand.
Our comprehensive knowledge of all New Zealand employment sectors and understanding of the culture and customs guarantee an untroubled transition.
The Recruitment Process in New Zealand
A foreign company expanding into New Zealand does not require the assistance of a local entity to hire their employees. It is, however, vital to your recruitment efforts to know where you can find the right talent, as well as which local and international employment organizations they can collaborate with to access the right talent pools. This, however, does not come easily – and once the right employee is found, the employer must follow thorough staffing and registration procedures. These include:
Registering with the Inland Revenue Department
Registering employees with Kiwi Saver for social security contributions
Creating employment contracts and translating them to English and Maori.
Applying for employees’ employment invitations and work permits
Applying for employee’s visas or special expatriation status (if applicable).
Calculating employees’ monthly salary and creating payslips.
Researching for any available tax-free allowances or benefits.
Submitting wage tax returns and national insurance forms.
Corresponding with the involved parties (organizations, trade unions, etc.).
Creating annual accounts, financial administration, and year-end statements.
Creating a payment schedule for wage tax, national and social insurances, and net wages.
The recruitment process requires time and dedication, and how can you find these things in the array of all these complicated tasks? Well, allow us to provide the answer – by engaging an Employer of Record (EOR) such as Bradford Jacobs. By acquiring our services, we can convert your New Zealand expansion goals into an action plan with a few simple steps:
Bradford Jacobs steps in as an EOR and acquires the right employees, ensuring they comply with New Zealand’s employment contracts, payroll, HR, tax, visa requirements, and work permits (if required).
We manage all work-related registration formalities, whilst you have daily control of your employees.
The employees must complete their time sheets and expenses claims and we invoice you, the client. Once paid, we deduct all contributions to the New Zealand authorities and transfer the balance into employee’s account.
Within a few days, your company has international presence in New Zealand – in a prime position to explore further expansion without risking the expense or hassle of setting up your own subsidiary or branch office.
Legal Checks on Employees in New Zealand
When commencing the recruitment process in a foreign country, employers should consider their legal obligations. Local law in New Zealand requires employers to implement equal treatment in the workplace and protect employees against discrimination based on several characteristics such as race, nationality, gender, sexual orientation, religion, and political beliefs, amongst others.
This equal treatment and anti-discrimination also apply to recruitment. When in the recruitment process, background checks may be requested by employers, but they can only be done with the consent of the prospective employee.
Legal checks are governed by the Privacy Act (2020) in New Zealand and puts responsibility on agencies and organizations about how they must protect individuals’ information when given. These checks that employers can make on prospective employees include:
Criminal record checks – Employers can get an applicant’s relevant criminal history from the Ministry of Justice or vetting information from the police, but only if the applicant agrees to this in writing. Applicants will also be asked if they have any previous convictions or a criminal history, and it is stressed that they must answer honestly.
Previous names check – An applicant can be asked for any previous names for a thorough criminal and/or credit check. These details can only be used for a lawful reason, and if all applicants are being asked. These details cannot be used for reasons such as trying to find out if the applicant is a transgender person.
Drugs and alcohol tests – In safety-sensitive workplaces, per-employment testing is used by employers to show that they are serious about managing the risks of alcohol and drugs. Stating the need for these tests in job advertisements is also recommended, to ensure that applicants are aware of this from the start. In cases of these tests, it is best to wait for the results before making a job offer. Employees may also be required to submit to alcohol or drug tests if this is a condition of their appointment and recorded in their employment contract or another document.
Credit checks – credit checks of applicants are only required for work that involves financial risk and must be done with the applicant’s permission. Credit checks should also be limited to short-listed applicants.
Employment history checks – these are standard checks which are normally done with references from previous employment.
Basic Facts on Hiring in New Zealand
An employer’s questions during an interview must be related to the skills and other matters relevant to the capability and suitability of the applicant to the role. Questions relating to the personal lives or questions based on discriminatory intent are prohibited.
For advertising vacancies, private sectors do not have to advertise unless they have a specific requirement in employment agreements or workplace policies, whilst many public sector employers are required by law to notify the public of a vacancy to ensure that suitably qualified applicants are aware of the vacancy. Public sector employees must then appoint the applicant best suited for the position.
Terms and conditions of employment in New Zealand are governed by legislative labor laws.
For onboarding employees, you will need certain documentation: the employment contract, a working visa (for non-residents), a copy of a license or qualification for the job (if required), bank account details, contact details of the employee, training documents, code of conduct, etc.
Employers must follow anti-discrimination laws throughout the process of recruitment, which prohibits discrimination on a number of bases, such as racial origin, sex, age, financial status, disability, health status, family status, nationality, sexual orientation, membership of a trade union or other organization representing employee’s interests, and type of employment relationship.
In New Zealand, employment contracts must be concluded in writing for every employee, and minimum employment rights must always be complied with, even if they are not included in the employment contract.
Collective agreements also play a significant role in employment conditions – collective bargaining with trade unions is gratified with these unions and cover all employees that are part of the corresponding trade union.
Administration and enforcement of employment regulations are governed by the Ministry of Business, Innovation and Employment.
There is a 30-day rule in place concerning employment contract terms with collective agreements. For the first 30 days of work, an employee must be engaged under the terms and conditions that are consistent with the applicable collective agreement (if one is in place). It is important to note that the employee does not need to part of the trade union for this trial period to take place. An employer and employee may also agree on more favorable terms than the ones that are in the collective agreement. After the 30-day trial period ends, the employee and employer must revisit the employment agreement. If the employee has not become a member of the trade union that is responsible for the collective agreement, then both sides can negotiate and agree on different employment terms and conditions in an individual employment agreement.
Employers must at least meet the minimum wage for the employee’s salary, but the average monthly salary may differ according to the industry and sector.
There are no overtime rates in New Zealand. Employers are, however, obliged to pay the same rate for overtime work of employees.
In a week, employees are entitled to 2 rest days.
Employers are obligated to with-hold and pay employees’ personal income tax and social security contributions monthly.
The standard notice period for employment termination is one month – however, this may vary according to the employment contract and cannot exceed one year.
The probationary period is generally agreed upon between the employer and employee but should not exceed 3 months.
Termination of employment during the trial period/probation also requires a notice period.
To succeed in business in New Zealand, it is vital for both employers and employees to have a strong understanding of the business culture. As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about New Zealand work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in New Zealand to start your expansion well-informed.
To succeed in business in New Zealand it is vital to have a strong understanding of the country’s business culture. New Zealand’s business culture is globally minded, inventive, self-reliant, and places importance on both the work of management and the employees.
The work environment is largely egalitarian, placing importance and value on useful ideas and feedback from all participants, rather than operating under traditional business hierarchies. Businessmen in New Zealand value honesty, openness, and place significant trust on those that they are doing business with. Thus, it is important to both you and your local business partners to treat business dealings with respect and great care.
There has been an increasing awareness around the world in the importance of work-life balance and flexible working times, but New Zealand, like many, still regard office etiquette to be of great importance to the management of business and business relations. Here are some tips and tricks to use during your first few months:
Punctuality: Punctuality is expected in New Zealand. Being more than 5-10 minutes late without giving someone forewarning is seen by locals as disrespectful. Tardiness reflects badly, so it is best to arrive to meetings on time or a little early.
Languages: The English language is used for day-to-day business dealings in New Zealand, but the Maori language is also a big part of the culture in New Zealand, so it may work in your favor to learn a few Maori phrases.
Introductions/Greetings: Greetings in New Zealand are casual, consisting of a handshake and a smile. Smiling is important as it indicates pleasure of meeting the other person.
Gift-giving: Giving gifts in business meetings or partnerships are greatly appreciated, when one does so, although they are not expected. However, be wary of when you send the gift and how, so it will not appear to be an attempt at bribery. So, avoid giving gifts during business deal negotiations, and give gifts either before business dealings, during introductions, or after as a form of congratulations.
Dress code: When doing business in New Zealand, it is best to dress conservatively and more towards a formal look. Men should wear dark-colored suits with a white shirt and a tie, whilst women should a dark-colored suit, a dress, or a skirt and blouse with a jacket. However, the de facto dress code is smart casual.
Formality: Formality is still given importance in business dealings in New Zealand, despite the casual demeanor of New Zealanders in most situations.
In the case of addressing business partners, locals tend to move to first names quickly, but it is best to address them by their honorific title and surname until they suggest moving to a more familiar level.
Meetings: To begin meetings, it is best to break the ice with some light and social conversation, as well as some food or drinks. It is best to avoid personal topics and use humor throughout to lighten the setting. Maintaining the impression that everything is well-managed and under control is advised. New Zealanders want to feel relaxed about business, no matter the situation.
Agreements: Agreements must state all points clearly, and all terms and conditions should be explained in detail. Agreements should be written down.
Socializing: Self-deprecation is common in conversation in an effort to come across as humble, honest, and relaxed about themselves, and cussing is very common in conversation.
Hierarchy: Anyone present in business dealings or meetings may voice their opinions, regardless of their age or position. Using a position of power as leverage is generally frowned upon in New Zealand.
Communication: New Zealanders are relatively indirect as communicators. They do their best to avoid conflict and wish to avoid openly rocking the boat, so they will take careful measures to remain polite throughout conversation or discussion. However, their communication is not so indirect as to provide deciphering, and New Zealanders tend to speak openly enough that their intentions and meanings of their words are clear enough. New Zealanders also tend to feel uncomfortable with long stretches of silence, whereas the Maori then to feel quite comfortable with it and feel less of a need to fill these silences with filler conversation.
New Zealand’s Minimum Wage
In New Zealand, the minimum wage applies to all employees aged 16 and over who are employed full-time, part-time, fixed-term, casual, working from home, and are paid by wages, salary, commission, or piece rates. The minimum wage rates are set annually and is set by the Workplace Relations and Safety Minister and the Ministry of Business, Innovation and Employment.
As of 1 April 2021, the adult minimum wage was increased to NZ$20 per hour.
A starting-out minimum wage – applies solely to workers aged between 16 and 19 and are entering the workforce for the first time.
A training minimum wage – applies to employees aged 20 years and over who are completing recognized industry training which involves at least 60 credits to become qualified
Probation Periods in New Zealand
New Zealand has two types of probationary periods for new employees:
A trial period: Trial periods are used by employers with 19 or fewer employees when hiring new employees and is eligible so long as it is agreed to by both parties in the written employment agreement. The trial period can be no more than 90 days.
Probation period: A probationary period can be used for new employees, as well as employees taking on a higher role or additional responsibilities. Probationary periods are not limited to 90 days and can potentially be used for longer periods of time, if agreed to by both parties and with good reason.
Working Hours in New Zealand
Working hours cannot exceed 40 hours per week, exclusive of overtime. Where the maximum number of hours to be worked every week is not more than 40, the employment agreement shall fix the daily working hours so that employees will not be more than 5 days a week.
The fixed number of hours to be worked in a week may be greater than 40 if both the employer and employee agree.
Overtime in New Zealand
Overtime rates are to be negotiated between the employer and employee. There is no legal requirement to pay for overtime at a premium rate, but employees on an hourly wage must be paid for all hours worked.
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