New Zealand PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in New Zealand to companies willing to enter the New Zealand market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in New Zealand.  However our solution allows you to start the operations in New Zealand within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

New Zealand fast facts

Population, million: 4.8
Land area: 268,000  km² 
Capital: Wellington
Local currency: New Zealand dollar

Hiring, Negotiating and Doing Business in New Zealand

Necessity of written employment contract

In New Zealand, employment contracts can be oral or written, but it is best practice to put a strong, written contract in place, in English, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in New Zealand should always state the salary and any compensation amounts in New Zealand Dollars rather than a foreign currency.

Different forms of engagement: employment, contracting, work with private entrepreneur

Permanent employees (full or part-time)

These are the most common type of employee. Permanent employees have the full set of employment rights and responsibilities.

Employees have to meet certain criteria to qualify for some employment entitlements, such as parental leave, parental leave payments, annual holidays, sick leave and bereavement leave. There may be small differences between full-time or part-time employees because of their work patterns.

Fixed-term employees (full or part-time)

A fixed-term (temporary) employee’s employment will end on a specified date or when a particular event occurs. A fixed-term employee might be someone who is brought in to replace another employee on parental leave, to cover a seasonal peak or to complete a project. 

There must be a genuine reason based on reasonable grounds for the fixed term and the employee must be told about this reason.

Seasonal employees

Seasonal employment is generally a type of fixed-term employment where the employment agreement says that the work will finish at the end of the season. It’s commonly used in the fruit, vegetable, fishing and meat industries, for example, in a job picking apples when they ripen, after the work is completed (when all the apples are picked) the employer doesn’t need the workers and the fixed term ends. In some situations, seasonal employment can become a rolling fixed-term employment in which the employee is re-hired at the start of every season.

Triangular employment situations

Sometimes employees work in a triangular employment situation. This is where someone is employed by one employer (the agency), but is working under another business or organisation that directs or controls their day-to-day work (controlling third party). It is ‘triangular’ because there are three parties to the arrangement, with each party having distinct relationships with one another. The three parties are: the employer, employee, and the third party.

New Zealand Employment Contract

Types of employment agreements

Every employee must have a written employment agreement. It can be either an individual agreement or a collective agreement. All employers must keep a copy of each employee’s employment agreement.

Working Hours in New Zealand

Hours of work and overtime payments are matters to be agreed between each employee and their employer. The usual working week is 40 hours, although there is nothing to prevent employees and employers agreeing to a great or lesser number of working hours during the week. In many professions there is no additional payment for overtime, although in a number of blue-collar sectors, collective agreements and individual employment agreements specifically provide for overtime payments.  Where employees work on one of the 11 annual public holidays, and that day is usually a working day for that employee, then by law the employee is entitled to a paid day off at a later date.

Vacation leave in New Zealand

The entitlement to a minimum of 3 weeks paid holiday per year after 12 months continuous employment is set out in the Holidays Act, as is the entitlement to at least 5 days special leave for each 12 month period of employment after the first 6 months continuous employment.  Special leave can be used for such matters as illness of the employee, his or her spouse of dependants, and bereavements.

New Zealand Maternity Leave

The Parental Leave and Employment Protection Act 1987 provides minimum entitlements to unpaid parental leave for both mothers and fathers in respect of the birth or adoption of a child.  The leave entitlements under the Act are for periods not exceeding 14 weeks (for maternity leave) 2 weeks (for paternity leave), a total of 52 weeks (for extended parental leave), and 10 days (special leave, which can be taken by a female employee who is pregnant, before she takes maternity leave, for reasons connected with her pregnancy).

The New Zealand Parliament is currently considering a proposal to introduce paid parental leave. The details of this proposal are still being finalised by the Government, but early indications are that the scheme may involve 12 weeks paid leave at 80% of salary.

New Zealand Severance Laws

Under the ER Act, the termination of any employee must be for sufficient cause and carried out in a procedurally fair manner.  Where an employee’s employment is terminated in a manner inconsistent with these two requirements, that employee can commence a personal grievance claim, the remedies for which include reinstatement, an award of lost wages and benefits, and compensation for humiliation and distress.  Reasons for justifiable termination include redundancy (where an employee’s position of employment is surplus to the requirements of an employer), poor performance, serious misconduct, and inability to perform employment due to continuing illness. 

Employers who want to dismiss an employee have to:

• act in good faith
• have a good reason
• follow a fair and reasonable process
• have an open mind when dealing with problems so they ensure outcomes are not pre-determined.

If the employer doesn’t follow the above, the employee may be able to take a personal grievance claim against the employer.

Notice period

An employer must give the appropriate amount of notice specified in the employment agreement unless they are dismissing for serious misconduct.

Severance payments

It is best practice to establish entitlement and termination terms in a written employment contract before the employee’s first day. New Zealand does not have a statutory severance pay scheme, so employees are entitled to severance or redundancy pay only if their employment agreement outlines it.

New Zealand Tax

New Zealand does not have a social security tax, but you must pay a 15% Goods and Services Tax (GST) on any goods and services sold in the country.

Health Insurance Benefits in New Zealand

Sick leave can be used when an employee is sick or injured, or when the employee’s spouse or a dependent person (such as a child or elderly parent) is sick or injured and needs care.

Sick leave does not get paid out when you resign; not unless it’s permitted in the award. Only 2 awards allow employees to cash out sick and carer’s leave: the Timber Award and Stevedoring Award.

If you’re a casual employee, or have had fixed-term contracts with the same employer but the contracts were not one after the other, you’re entitled to sick leave after 6 months if you’ve worked at least:

• 10 hours per week on average, and
• no less than 1 hour every week or 40 hours every month.

Additional Benefits in New Zealand

Employees highly value a private health care supplement.

New Zealand Holidays

• New Year’s Day
• Waitangi Day
• Good Friday
• Easter Monday
• Anzac Day
• Queen’s Birthday
• Labor Day
• Christmas Day
• Boxing Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.