New Zealand

Situated in the southwest Pacific Ocean, the nation of New Zealand actually consists of around 600 individual islands, with two main landmasses: North Island and South Island.

Historically, New Zealand served as a home to the Maori people, having been settled by Polynesians in the mid 13th century.

Later, in the mid-17th century, European explorers arrived in New Zealand to colonise and, in 1841, the country became part of the British Empire.

Today, New Zealand is a sovereign nation, with power vested to a democratic parliament led by a prime minister. It is home to large British and Maori-heritage populations but its society is diverse, with significant demographics of Asians and Pacific Islanders.

New Zealand’s closest neighbours are Australia to the west, the islands of Fiji, Tonga, and New Caledonia to the north, and Antarctica to the south - but the country has developed strong links across the APAC region.

With a range of dramatic natural environments - from snow-capped alps, to volcanic plateaus and jungles - New Zealand is one of the most geographically diverse nations on earth.

The country experiences a predominantly temperate climate throughout the year but weather patterns vary sharply across its islands: summers in the north can be hot and dry, but harsh snowfall is common in locations on South Island.

General Information

• Full Name: New Zealand
• Population: 5,124 million (World Bank, 2022)
• Capital: Wellington
• Major Language: English, Maori
• Major Religion: Christianity
• Monetary Unit: New Zealand Dollar ($NZ)
• Main Exports: Wool, food products, dairy products, wood and paper products
• GNI per Capita: US $49,090 (World Bank, 2022)
• Internet Domain: .nz
• International Dialling Code: +64

Dates

Dates are usually written in the day, month and year sequence. For example, 1 July 2024 or 1/7/24.

Numbers are written with a period to denote thousands and a comma to denote fractions. For example, NZ$ 3.000,50 (three thousand dollars and fifty cents).

New Zealand is renowned for its open, transparent, and efficient business environment, making it an attractive destination for entrepreneurs and international companies alike. Known for its ease of doing business, robust legal framework, and commitment to innovation, New Zealand offers a supportive ecosystem for businesses looking to start, expand, or innovate.

New Zealand consistently ranks at the top in global ease of doing business rankings. The country’s straightforward regulatory environment, transparent legal processes, and efficient government services contribute to a business-friendly climate. Starting a business can be accomplished in a matter of hours, and the process of obtaining permits and dealing with construction, taxation, and cross-border trading is streamlined and clear.

The government in New Zealand actively supports business growth and development through various initiatives and incentives. This includes grants for research and development (R&D), tax incentives for innovation, and support programs for startups and small businesses. The government’s approach is focused on fostering a competitive and dynamic business environment that encourages entrepreneurship and economic diversification.

New Zealand’s economy is highly open and integrated into the global marketplace. The country has a network of free trade agreements, providing businesses with access to major global markets, including Australia, China, and ASEAN countries, among others. New Zealand’s export-driven economy is supported by a strong focus on quality and sustainability, particularly in sectors such as agriculture, forestry, and fisheries.

Committed to innovation and technological advancement, the country has a vibrant tech sector, with strengths in software development, agri-tech, clean energy, and creative industries. The government’s investment in R&D, alongside collaboration between universities, research institutions, and businesses, drives technological innovation and provides opportunities for businesses operating in high-tech sectors.

New Zealand benefits from a highly educated, skilled, and adaptable workforce. The country’s education system emphasises critical thinking, creativity, and innovation, preparing individuals for the demands of a modern economy. New Zealand’s workforce is known for its problem-solving abilities, making it an asset for businesses looking to innovate and grow.

The country offers diverse investment opportunities across various sectors, including agriculture, technology, tourism, renewable energy, and manufacturing. New Zealand’s focus on sustainability and clean technology also presents opportunities for investment in green projects and initiatives that are aligned with global environmental goals.

Doing business in New Zealand represents an opportunity to tap into a dynamic and forward-looking economy known for its ease of doing business, innovative ecosystem, and global connectivity. The country’s supportive government policies, skilled workforce, and commitment to quality and sustainability make it an ideal location for businesses looking to establish a presence in the Asia-Pacific region or to leverage New Zealand’s strengths in innovation and technology. Whether you’re a startup, SME, or multinational corporation, New Zealand offers a welcoming and supportive environment for your business ambitions.

New Zealand offers a compelling proposition for businesses and investors seeking opportunities in a stable, progressive, and innovative environment. Known for its ease of doing business, robust legal framework, and high quality of life, New Zealand provides a unique blend of advantages that support business growth and investment.

New Zealand is consistently ranked among the top countries for ease of doing business. Its straightforward regulatory procedures, transparent legal system, and efficient government services simplify the process of starting and operating a business. The government's pro-business stance is evident in its efforts to reduce bureaucratic hurdles and foster an environment conducive to business growth and development.

Situated in the Pacific, New Zealand serves as a gateway to Asia-Pacific markets, offering businesses strategic access to Australia, Asia, and the wider Pacific region. Its network of free trade agreements extends market access, reducing barriers and opening doors to significant economic zones. This strategic location is particularly advantageous for export-oriented businesses and those looking to tap into the burgeoning markets of the Asia-Pacific.

New Zealand prides itself on a culture of innovation and creativity, supported by government incentives for research and development. These incentives, alongside collaboration between industry, academia, and research institutions, fuel innovation across sectors such as agriculture, biotechnology, information technology, and renewable energy. Investing in New Zealand offers businesses the opportunity to be at the forefront of innovative solutions and technological advancements.

The country's education system emphasises skills, creativity, and adaptability, producing a workforce that is not only highly skilled but also flexible and resilient. New Zealanders are known for their problem-solving abilities and innovative thinking, making the workforce a significant asset for businesses operating in a rapidly changing global economy.

New Zealand is known for its political stability, transparent government practices, and sound economic policies. This stability, combined with the country's resilience in facing global economic challenges, provides a secure environment for investment and long-term business planning.

Investing in New Zealand offers businesses a wealth of opportunities in a country that values innovation, sustainability, and global connectivity. The strategic advantages of doing business in New Zealand, from its pro-business environment to its commitment to quality and green growth, make it an attractive destination for investors looking to capitalise on the Asia-Pacific region's potential.

Foreign Direct Investment (FDI) in New Zealand is a testament to the country's appeal as a destination for international businesses seeking growth, stability, and innovation. With its strategic geographic location, progressive business environment, and commitment to sustainability, New Zealand offers compelling opportunities for FDI across various sectors. Here's an exploration of the FDI landscape in New Zealand, highlighting the benefits, sectors ripe for investment, and the supportive framework that facilitates foreign investment.

New Zealand's open economy is designed to welcome FDI, recognising it as a key driver of economic growth, technological advancement, and employment. The government ensures a transparent and straightforward process for foreign investors, supported by regulatory clarity and a stable political climate. This welcoming approach is underpinned by New Zealand's adherence to international standards and practices, making it a reliable partner for global investors.

Incentives for FDI in New Zealand

• R&D Tax Incentives: New Zealand offers a tax incentive program for research and development activities, allowing businesses to claim a tax credit on eligible R&D expenditures. This incentive aims to boost innovation across industries, particularly in technology, biotech, and agri-tech sectors.
• Streamlined Regulatory Processes: The country is known for its efficient regulatory environment, minimising bureaucratic hurdles for businesses. The Overseas Investment Office (OIO) provides clear guidelines for foreign investors, facilitating a smoother investment process.
• Access to Free Trade Agreements (FTAs): New Zealand has a network of FTAs with key global markets, including China, Australia, and ASEAN countries, among others. These agreements provide reduced tariffs and improved access for New Zealand-based businesses to international markets.
• Supportive Business Ecosystem: New Zealand Trade and Enterprise (NZTE) offers comprehensive support to foreign investors, including market entry strategies, networking opportunities, and practical advice on establishing and growing a business in New Zealand.
• Skilled Immigration Visas: To attract talent and investment, New Zealand provides various visa categories for entrepreneurs, investors, and skilled professionals. These visa policies facilitate the entry of key personnel and their families, supporting businesses in building a skilled workforce.

Opportunities for FDI in New Zealand

• Agriculture and Forestry: With its rich natural resources, New Zealand is a leader in sustainable agricultural practices and innovative forestry solutions. Opportunities abound in agri-tech, dairy production, and sustainable timber processing.
• Technology and Digital Sector: The country's thriving tech scene, especially in Auckland and Wellington, offers fertile ground for investments in software development, digital media, and emerging technologies like AI and blockchain.
• Renewable Energy: New Zealand's commitment to reaching 100% renewable electricity generation by 2030 creates significant investment opportunities in hydro, wind, geothermal, and solar energy projects.
• Tourism Infrastructure: Investment opportunities exist in developing tourism infrastructure, including accommodations, eco-tourism ventures, and cultural experiences that showcase New Zealand's unique heritage and natural beauty.
• Infrastructure Development: As New Zealand focuses on upgrading its infrastructure, there are opportunities in transport, telecommunications, and urban development projects, including public-private partnership (PPP) arrangements.
• Creative Industries: The country's vibrant film and creative sectors offer opportunities for investment in production facilities, digital animation studios, and content creation ventures.

Regulatory Framework and Support Services

The Overseas Investment Office (OIO) is responsible for regulating FDI in New Zealand, ensuring investments benefit the country while protecting sensitive land and assets. The OIO's clear guidelines and efficient processing support foreign investors through the approval process. Additionally, organisations like New Zealand Trade and Enterprise (NZTE) offer guidance, market intelligence, and practical support to international businesses looking to invest.

A Commitment to Free Trade

New Zealand's network of free trade agreements (FTAs) with countries around the globe enhances its attractiveness as an investment destination. These agreements facilitate easier access to key markets, reduce barriers to trade, and provide a stable and predictable trading environment.

In New Zealand it is not mandatory to make payments to employees or the authorities from an in-country bank account.

Banks in New Zealand are typically open Monday to Friday 1.00am to 5.oopm. Some banks may open on a Saturday 9am to 12.30pm.

Whether you're a local entrepreneur or an international investor, setting up a business in New Zealand is a fairly straightforward process, governed by transparent and robust regulations. There are three main types of registration for businesses in New Zealand.

Partnerships

A Partnership in New Zealand is a business structure where two or more people or entities share ownership and management of a business. Each partner contributes to all aspects of the business and shares the profits and losses. The setting up process for Partnerships includes:

• Agreement: Partners usually enter into a Partnership Agreement, outlining the terms, roles, profit sharing, and responsibilities.
• Registration: While partnerships do not require formal registration with the New Zealand Companies Office, they should register for an IRD number for tax purposes.
• GST Registration: If the partnership’s turnover is over NZD 60,000 annually, it must register for GST.
• Compliance: Partnerships must maintain financial records, submit annual tax returns, and comply with relevant laws and regulations.
• Liability: Partners are personally liable for the debts and obligations of the business.

Limited Liability Company (LLC)

An LLC is a separate legal entity where the company’s finances are distinct from its owners'. Shareholders’ liability is generally limited to their investment in the company. The setting up process for a Limitied Liability Company includes:

• Name Reservation: Reserve a unique company name with the Companies Office.
• Incorporation: File an incorporation application online, including details like company addresses, director and shareholder details.
• IRD Registration: Obtain an IRD number post incorporation.
• GST Registration: Register for GST if the turnover exceeds NZD 60,000.
• Compliance: LLCs are required to file annual returns with the Companies Office, maintain accurate records, and adhere to the Companies Act 1993. They must also submit regular tax filings to the Inland Revenue.

Look-Through Company (LTC)

An LTC is a special type of company designed for small businesses, where the company's income and losses are passed directly to the shareholders. The setting up process for a Look-Through Company includes:

• Company Formation: First, set up a standard LLC.
• LTC Election: Apply to the Inland Revenue to elect LTC status. This should be done within the company’s early stages of operation.
• Eligibility: To qualify, the company must have five or fewer look-through counted owners and meet other specific requirements.
• Taxation: Shareholders of an LTC report their share of the company’s income and losses in their individual tax returns, which allows for certain tax advantages.
• Compliance: LTCs must maintain transparent and accurate financial records and comply with both the Companies Act and relevant tax laws.

Registrations must be made through the company’s office and all details can be located through the Business.Gov website.

Inland Revenue Department (IRD)

The Inland Revenue Department (IRD) in New Zealand is the government agency responsible for tax collection and the administration of the country's tax, social support, and related laws.

For businesses, one of the key interactions with the IRD involves registering to pay employees.

When a company in New Zealand hires employees, it must register with the IRD as an employer and obtain an IRD number if it doesn’t already have one. This registration is crucial for managing and remitting Pay As You Earn (PAYE) tax on behalf of the employees. The form required to do this is an IR334 form which can be found through the IRD website.

The PAYE system is a method of withholding income tax and national superannuation contributions from employee wages. Companies are required to file regular payroll returns, detailing the income and deductions for each employee, and remit the deducted PAYE to the IRD. These filings are usually done electronically using the IRD's online portal, myIR

New Zealand offers a range of visa options designed to meet the diverse needs of migrants, from temporary work visas that cater to specific occupations or industries, to resident visas for those seeking to make New Zealand their long-term home. Each visa category comes with its own set of criteria, application processes, and rights, meticulously crafted to support the country's economic growth while ensuring the welfare of its residents and citizens. The most common visas for business are:

Temporary Work Visas

These visas are for individuals who wish to work in New Zealand on a temporary basis. Common types include the Essential Skills Work Visa, Work to Residence Visa, and the Specific Purpose Work Visa. Eligibility varies by visa type but generally requires a job offer from a New Zealand employer, relevant qualifications or work experience, and meeting health and character standards.

Essential Skills Work Visa

These visas are for individuals with skills needed by New Zealand employers. This visa is linked to specific job roles. Eligibility requires a full-time job offer in a role that matches your skills and experience, and evidence that no suitable New Zealanders are available for the job.

Work to Residence Visa

This visa allows employees to work in New Zealand with the intention of gaining permanent residency. Eligibility is based on two main streams

1. Long Term Skill Shortage List Work Visa
2. Accredited Employer Work Visa.

Each has specific criteria related to the job offer, salary, and qualifications.

Australian residents do not require a visa to enter New Zealand

For those residing in New Zealand or visiting for a longer period of time, a visa will be required. The applicant should apply via their nearest New Zealand embassy prior to travel. Further information can be found at the New Zealand Immigration website here.

Business Visas

There are two types of business visas

1. Investor visa
2. Entrepreneur visa

Investor Visa

Designed for individuals looking to make a significant financial investment in New Zealand.

• Investor 1 Category: Requires a minimum investment of NZD 10 million over three years.
• Investor 2 Category: Requires a minimum investment of NZD 3 million over four years, and applicants must meet additional criteria, including age, business experience, and English language proficiency.

Entrepreneur Visas

For those intending to start or purchase a business in New Zealand. The two types of visas are

• Entrepreneur Work Visa: A three-year work visa that is step one toward applying for residence. It requires a detailed business plan and a minimum capital investment, along with meeting health and character requirements.
• Entrepreneur Resident Visa: Available to those who have run a business for two years (or one year if certain requirements are met) on an Entrepreneur Work Visa.

Visa Waiver Programme

New Zealand Immigration allows many visitors to enter the country with a visa-waiver for 90 days. This is extended to six months for holders of United Kingdom passports. Before travelling, eligible visitors must obtain a New Zealand Electronic Travel Authority (NZeTA).

The tax year in New Zealand runs from 1st April to 31st March.

There is no requirement for a third party to be licensed in order to make any tax and/or social security filings on the behalf of a client.

Business Taxes

The New Zealand tax system is administered by Inland Revenue (‘IRD’). The standard New Zealand tax year ends on 31 March; however, companies can apply for a Substituted Accounting Period (‘SAP’) with the IRD to align its financial year with that of a foreign owner.

A New Zealand resident company is liable to pay New Zealand tax on its worldwide income at the applicable corporate tax rate.

A non-resident company is only liable to pay New Zealand tax on its New Zealand sourced income, at the applicable corporate tax rate.

Business Tax Rates

The business tax rates for the 2023 - 2024 financial year are:

Other Business Taxes

Goods and Services Tax

Goods and Services Tax (‘GST’) is a consumption tax on the supply of goods and services, similar to the value added tax models adopted by most countries around the world. GST is levied at a flat rate of 15 percent of the value of goods and services consumed in New Zealand (including imports). Businesses carrying on a taxable activity in New Zealand, must register for GST when their GST turnover exceeds 60,000.

Fringe Benefits Tax

The New Zealand Fringe Benefits Tax (‘FBT’) year runs from 1 April to 31 March. FBT is a tax imposed on both resident and non-resident employers who provide certain benefits (other than salary and wages) to employees and their associates in connection with their employment. These benefits include but are not limited to:

• Motor vehicles available for private use
• Low interest/interest free loans
• Free, subsidised or discounted goods and services
• Employer contributions to sick, accident or death benefit funds, superanuation schemes and specified insurance policies.
• Entertainment

Employers can pay FBT at either a single rate of 63.93% or calculate using the alternate rate. Under the alternate rate method, the annual FBT return is prepared using a calculation to determine the relevant employee’s alternate rate determined by their net remuneration. The current FBT rates are:

Key Tax Considerations

Capital Gains

New Zealand does not have a comprehensive capital gains tax regime.

Tax Consolidation

New Zealand has a tax consolidation regime which provides wholly owned groups with the option to consolidate for income tax purposes. Forming a tax consolidated group results in a group of entities being treated as a single entity for income tax purposes and lodging a single income tax return. Transactions between members of the consolidated group are generally ignored for income tax purposes.

Tax Losses

Tax losses incurred by a taxpayer are available to be carried forward indefinitely and offset against income in future years subject to satisfying the Shareholder Continuity Test or the Business Continuity Test.

Transfer Pricing

New Zealand has robust transfer pricing provisions based on the rules developed by the Organisation for Economic Cooperation and Development (‘OECD’). These provisions are aimed to ensure that transactions between overseas related parties are conducted at “arm’s length”.

Whilst there is no requirement to maintain transfer pricing documentation, foreign companies conducting business in New Zealand need to carefully consider the pricing and documentation requirements to align with New Zealand’s transfer pricing provisions.

Thin Capitalisation

New Zealand’s thin capitalisation provisions operate to limit the level of debt deductions available to foreign controlled New Zealand taxpayers. The thin capitalisation rules apply where debt deductions for a particular financial year exceed NZD1 million and the entity’s debt-to-equity ratio exceeds the relevant threshold. The calculations to determine the apportionment of allowable debt deductions are complex, however broadly the amount is based on a debt percentage of 60% for foreign controlled New Zealand taxpayer’s (inbound thin capitalisation) and 75% for New Zealand taxpayers with offshore investments (outbound thin capitalisation).

Double Tax Agreements

New Zealand has Double Tax Agreements (‘DTA’) with more than 40 tax jurisdictions. These DTA’s apply to prevent double taxation and fiscal evasion, and foster cooperation between New Zealand and other international tax authorities.

Non-Resident Withholding Taxes

New Zealand imposes dividend (30%), royalty (15%) and interest (15%) withholding taxes on payments to non-residents. The withholding tax rates may be reduced under a DTA or as a consequence of exceptions under domestic legislation.

An individual’s tax code is dependent upon how many sources of income an individual has and whether the individual has a student loan.

New Zealand resident individuals are taxable in New Zealand on their worldwide income. Non-resident individuals are only taxable in New Zealand on their New Zealand sourced income.

Both residents and non-residents are taxable in New Zealand on a progressive scale of marginal rates.

Resident and non-resident marginal rates for the 2023-2024

New Zealand employees & employers KiwiSaver minimum contribution 3%. This is a compulsory scheme for employers if an employee has opted in.

Further information can be found via the following governmental websites:

• Inland Revenue Department
• Kiwi Saver

KiwiSaver

KiwiSaver is a voluntary, work-based savings initiative to help employees with their long-term saving for retirement. There are a range of membership benefits like regular contributions from the employer and an annual member tax credit paid by the government.

KiwiSaver is not guaranteed by the government, and the schemes are managed by private sector companies called KiwiSaver providers. Employers can choose which KiwiSaver provider to invest their money with.

An employee can join KiwiSaver if he/she is:

• a New Zealand citizen, or entitled to live in New Zealand indefinitely, and
• living or normally living in New Zealand (with some exceptions), and
• below the age of eligibility for NZ Super (currently 65)

An employee can’t join KiwiSaver if he/she is:

• holding a temporary, visitor, work or student permit
• living overseas, unless he/she is a government employee:
  • serving outside New Zealand, and
  • employed on New Zealand terms and conditions, and
  • serving in a jurisdiction where offers of KiwiSaver scheme membership are lawful.

Employees are automatically enrolled (if eligible) on starting a new job unless they elect to opt out within a certain period. KiwiSaver is deducted from gross pay each pay period. Currently an employee can choose to contribute at 3%, 4%, 6%, 8% or 10%.

A liability to pay employer Superannuation Contribution Tax (ESCT) arises when an employer makes a cash contribution to a superannuation scheme (including a KiwiSaver fund) that meets the definition of a superannuation fund, subject to certain exemptions. Generally, the rate of tax withheld is based on the employee’s marginal tax rate.

On 1^st April 2019, ‘Payday Filing’ came into effect.

All employer reporting obligations which were previously submitted via an EMS and EDF, are now submitted directly from the payroll engine to IRD no later than two days after payday. This is real-time reporting and ensures that liabilities that are paid into IRD when net wages are paid to employees and are allocated in a timely manner to the respective employer accounts.

To register a new start, a completed IRD declaration form will be sent to the IRD by the HR/payroll department of the clients or provider. The employee must be registered as soon as they start work, and the IRD number can be issued within 24hrs at a cost of $12 or 10 working days for a standard application.

If employees have no IRD number or form, they are automatically taxed at the highest rate. When setting up a new start, the following information is required:

• Personal & contact information such as:
  • Name
  • Address
  • Phone number
  • Date of birth
  • Start date

• Personal tax details provided by completing the IRD declaration form
• Superannuation details by completing the KiwiSaver form

Payment for leavers must be made by the final day of employment or by agreement.

While paper or electronic payslips are still very common in many workplaces, unless there is an agreement to do so, an employer is under no specific legal obligation to provide a payslip.

In the interest of ensuring that everyone understands when and how wages or salaries have been calculated and paid, an employee has the right to access or obtain a copy of the employer's wage and time records relating to that employee. This record must be kept by the employer for each of their employees. It would include details such as, but not limited to:

• The kind of work the employee does
• The amount of hours/days that the employee works
• The wages paid to the employee each week and the method of calculating those wages
• The nature of the employment agreement

Reports

Payroll reports must be kept for at least seven years. The records can be kept electronically as long as the records can be printed out on request.

New Zealand Payslip Example

The Worker Protection (Migrant and Other Employees) Act 2023

In effect on 6 January 2024, The Worker Protection (Migrant and Other Employees) Act 2023 marks a significant milestone in New Zealand's commitment to safeguarding the rights and well-being of employees, particularly those who are migrants. This comprehensive legislation is designed to bolster existing immigration and employment laws, introducing enhanced measures to prevent exploitation and ensure fair treatment in the workplace. 

Key Features of The Worker Protection Act

• Enhanced Protections Against Exploitation: The Act introduces stricter penalties for employers who exploit workers, whether they are migrants or domestic employees, reinforcing the government's zero-tolerance stance on exploitation.
• Improved Legal Framework: By amending existing employment laws, the Act strengthens the legal protections available to workers, ensuring they have access to justice and support in cases of unfair treatment or abuse.
• Increased Transparency: Employers are required to provide clearer contracts and work conditions, enhancing transparency in employment relationships and ensuring workers fully understand their rights and obligations.
• Support for Migrant Workers: Recognising the vulnerability of migrant workers, the Act includes provisions aimed specifically at protecting their rights, such as access to information in their native languages and support services tailored to their needs.
• Collaboration with International Partners: The Act facilitates cooperation with other countries to combat cross-border exploitation and to promote best practices in protecting migrant workers.

Employers must familiarise themselves with the new requirements set forth by the Act and take proactive steps to ensure compliance. This includes revising employment contracts, implementing transparent recruitment processes, and providing ongoing support to migrant employees. Employers who are unable to immediately comply with a Labour Inspector’s requirement to supply copies (or produce records for inspection) must meet this requirement within 10 working days. Failure by the employer to supply the required records within the timeframe is an infringement offence. A Labour Inspector can:

• Issue an infringement notice and a fee of $1,000 per offence, up to a maximum of $20,000 in infringement fees in a 3-month period, or
• Seek a penalty at the Employment Relations Authority for each breach of up to $10,000 for an individual or $20,000 against a company or corporate body.

Holiday Accrual and Calculations in New Zealand

All employees are entitled to at least four weeks paid holiday a year.

Employees get their annual holiday entitlement on their first and subsequent anniversaries after starting work. There is no capping on annual leave accrued hours.

Annual Leave taken is paid at an average calculated rate. It is the higher of either the employees previous twelve months “Average Weekly Earnings” (AWE) or their “Ordinary Weekly Pay” (OWP)

Entitlement for annual leave in between an employee’s anniversary, is accrued as “Holiday pay”. That being 8% of the employee’s gross earnings per pay, is accrued from one anniversary to the next. On each anniversary this amount resets to zero and the employee receives four weeks leave entitlement.

When an employee terminates, they receive a payout for any unused annual leave hours accrued up until their last anniversary and the lump sum holiday pay that has accrued after their last anniversary until termination date.

Maternity Leave in New Zealand

The government-funded scheme, which is administered by the IRD covers payments for 14 weeks. For more information on this, visit the IRD website here.

Unpaid maternity leave entitlement is up to 14 weeks, which can start up to 6 weeks before the expected birth of the child. Employees with 12 months eligible service are entitled to an additional extended leave of up to 52 weeks.

Redundancy Protection during Pregnancy and Leave

From 6 April 2024, redundancy protection rights have been extended. This protection now also applies during pregnancy and for an 18-month period after taking relevant leave (maternity, adoption, or shared parental leave).

• For pregnancy, this protection applies from the time the employee notifies their employer of their pregnancy. If the employee is entitled to statutory maternity leave, the protected period of pregnancy will end when the maternity leave starts
• For maternity leave, the additional protected period ends 18 months after the expected week of childbirth or 18 months after the child's birth date if informed before the end of maternity leave
• For adoption leave, this period ends 18 months after the child's placement for adoption
• For shared parental leave, the extension applies if the employee has taken at least six consecutive weeks of shared parental leave​

Paternity Leave in New Zealand

Unpaid paternity leave is up to two weeks for mother’s partner on the birth or adoption of a child.

Starting from 6 April 2024, new rights have been introduced for paternity leave. Employees may take paternity leave as two separate one-week blocks within the 52 weeks after birth or adoption, instead of the previous requirement to take it in one or two consecutive weeks within 56 days following birth.

The notice period required for taking paternity leave has been reduced to 28 days from the previous 15 weeks before the Expected Week of Childbirth (EWC)

Parental Leave in New Zealand

The Parental Leave Payments policy in New Zealand provides financial support to eligible parents taking leave from work to care for their newborn or newly adopted child.

To qualify for Parental Leave Payments, you must be the primary carer of a newborn or newly adopted child and have worked for an average of at least 10 hours per week in the 6 or 12 months prior to the baby’s expected delivery date or the date you become the primary carer of the adopted child.

The duration of Parental Leave Payments is up to 26 weeks. The payments can start up to 1 month before the baby's due date (or the date of the child's arrival in your care) and must be taken in one continuous period.

The payment amount is based on your average income but is subject to a government-set maximum cap. As of 2023, the maximum payment is NZD 621.76 per week before tax. If the employee earns less than the maximum cap, the payment will be equivalent to the employees average weekly income.

The payments are funded by the government and are administered by Inland Revenue. Employers are not responsible for funding Parental Leave Payments.

Both parents can take a portion of the 26 weeks, but the total combined leave cannot exceed 26 weeks.

In addition to Parental Leave Payments, mothers can also qualify for a special pregnancy grant if they stop working earlier due to pregnancy complications.

Carers Leave in New Zealand

From 6 April 2024, a new right has been introduced for employees with a caring responsibility for a dependant to take one week’s unpaid carer’s leave per year. This is considered a "day one" employment right.

The leave can be taken in half-days, full days, or a block of a whole week, and requests can be consecutive or non-consecutive. Employers can postpone the leave if it disrupts business needs but must allow it within one month of the originally requested start date

Sick Leave in New Zealand

Under New Zealand law, employees are entitled to a minimum provision of 10 days of paid sick leave per year, which becomes available after the first six months of continuous employment with the same employer. Following this initial period, an employee becomes eligible for an additional five days of sick leave after each subsequent 12-month period of continuous employment.

The right to accrue sick leave is capped at a maximum of twenty days. 

The responsibility for paying sick leave is with the employer. When an employee takes a sick leave day, they are paid their regular wages for the time they are absent, up to the limit of their accrued sick leave. Employers must ensure that their payroll systems accurately track sick leave accrual and usage to comply with the law and to provide transparency for employees.

National Service in New Zealand

New Zealand does not have a national service or compulsory military conscription. The country discontinued conscription in 1972. Since then, all military service in the New Zealand Defence Force (NZDF) is voluntary.

The national minimum wage rates in New Zealand up to 31 March 2024 are as follows:

• Adult minimum wage: NZD $22.70 per hour
• Starting-out wage: NZD $18.16 per hour (for workers aged 16-19 years old or in training)
• Training minimum wage: NZD $18.16 per hour

These rates apply to employees aged 16 years or over, and are set by the New Zealand government, reviewed each year.

From 1 April 2024 the national minimum wage rates in New Zealand will increase. 

• The adult minimum wage will be rising to $23.15 per hour. This is an increase of 45 cents per hour from the current hourly rate of $22.70.
• The training and starting-out minimum wages will both increase to $18.52 per hour, remaining at 80% of the adult minimum wage. This is a rise from the current minimum rate of $18.16 per hour.
• For employee who works 40 hours a week, the minimum wage increase to $23.15 per hour means they’ll earn an extra $18 each week before tax.

The working week in New Zealand is Monday to Friday. Working hours for commercial offices are generally 8am to 5pm.

Typically, lunch breaks range from between 30 minutes to one hour.

There are multiple statutory holiday schedules within New Zealand, which can be different regionally. Below are the statutory national and regional holidays in New Zealand for 2024.

 The dates for regional anniversaries like Hawke's Bay, Canterbury, Westland, Chatham Islands, Marlborough, and Canterbury (South) are not fixed and vary each year. They are often celebrated on the closest Monday to their historical date.

Expenses

Typical benefits provided in New Zealand include the following:

• Medical plan
• Meal voucher
• Transportation

All benefits and/or expenses are paid by the employer. They are not processed through the payroll.

In 2024, several key legislative changes are expected to impact income tax, social security, employment law, and employee benefits in New Zealand:

The Worker Protection (Migrant and Other Employees) Act 2023

• Set to take effect on 6 January 2024, The Worker Protection (Migrant and Other Employees) Act 2023 marks a significant milestone in New Zealand's commitment to safeguarding the rights and well-being of employees, particularly those who are migrants. This comprehensive legislation is designed to bolster existing immigration and employment laws, introducing enhanced measures to prevent exploitation and ensure fair treatment in the workplace.

Repeal of the Fair Pay Agreement Regime

• The Fair Pay Agreement regime, which provides unions and employer associations with a system to negotiate minimum employment terms at an industry-wide level, will be repealed. As a result, any current Fair Pay Agreement (FPA) bargaining will end, and no FPAs will be finalised​​.

Expansion of 90-Day Trial Periods

• The 90-day trial periods will be expanded to apply to all businesses, regardless of their size.
• Previously, these trial periods were limited to employers with fewer than 20 employees. This change could impact how larger employers introduce these trial periods in employment agreements​​.

Changes to Personal Grievances

• Consideration is being given to simplifying personal grievances and potentially removing eligibility for remedies if the employee is at fault.
• Additionally, there's discussion about introducing an income threshold above which a personal grievance could not be pursued​​.

Status of Contractors

• The government is maintaining the status quo that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court​​.

Amendment to the Employment Relations Act

A new bill extends the time available to employees to raise a personal grievance around allegations of sexual harassment from 90 days to 12 months​​.

90-Day Trial Periods Extended to Include All Employers

From 23 December 2023, 90-day trial periods are available for all employers, a significant change from the previous limitation to smaller businesses​​.

Redundancy Protection during Pregnancy and Leave

• From 6 April 2024, redundancy protection rights have been extended. This protection now also applies during pregnancy and for an 18-month period after taking relevant leave (maternity, adoption, or shared parental leave).
  • For pregnancy, this protection applies from the time the employee notifies their employer of their pregnancy. If the employee is entitled to statutory maternity leave, the protected period of pregnancy will end when the maternity leave starts.
  • For maternity leave, the additional protected period ends 18 months after the expected week of childbirth or 18 months after the child's birth date if informed before the end of maternity leave.
  • For adoption leave, this period ends 18 months after the child's placement for adoption.
  • For shared parental leave, the extension applies if the employee has taken at least six consecutive weeks of shared parental leave.

Paternity Leave Changes

• Starting from 6 April 2024, new rights have been introduced for paternity leave. Employees may take paternity leave as two separate one-week blocks within the 52 weeks after birth or adoption, instead of the previous requirement to take it in one or two consecutive weeks within 56 days following birth.
• The notice period required for taking paternity leave has been reduced to 28 days from the previous 15 weeks before the Expected Week of Childbirth (EWC).

Introduction of Carer's Leave

• From 6 April 2024, a new right has been introduced for employees with a caring responsibility for a dependant to take one week’s unpaid carer’s leave per year. This is considered a "day one" employment right.
• The leave can be taken in half-days, full days, or a block of a whole week, and requests can be consecutive or non-consecutive. Employers can postpone the leave if it disrupts business needs but must allow it within one month of the originally requested start date

These legislative changes reflect a significant update in various areas of employment law in New Zealand.

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.