New Zealand’s legal system is largely influenced by British common law, with some local Maori influences. This system includes many acts of parliament that relate to labor and employment, including the Employment Relations Act 2000, Holidays Act 2003, Parental Leave and Employment Relations Act 1987, and more. While your PEO will manage compliance with all of these statutes, it’s still useful to be familiar with the main points of law so you know what your employees are entitled to.
1. Employment Contracts
Every employee in New Zealand must be given a written contract, even though verbal agreements are legally binding, and must be able to access trusted advice before signing one. Fixed-term contracts are legal, but must be based on reasonable grounds, such as replacing an employee away on leave, seasonal work, or work on a project that has a defined end date. Otherwise, there is no mandated maximum length for fixed-term contracts.
2. Working Hours and Overtime
New Zealanders work a regular workweek of 40 hours, though this can be reduced to 37.5 hours in some instances. Employees must give their consent to work overtime, though the number of hours they work is not legally limited. There is no officially mandated amount that employees must be paid for overtime, though time-and-a-half is standard. Instead, their overtime rates are negotiated in their employment agreements.
3. Minimum Wage
New Zealand updates its minimum wage annually, and the most recent changes came into effect on April 1st, 2025.Â
Adult workers must be paid a minimum of 23.50 NZD (New Zealand dollars) per hour (around 13.25 USD) or 940.00 NZD per 40-hour workweek (around 530 USD).
Workers under the age of 20 who haven’t completed six months of employment, and those over the age of 20 who have not completed three months or 200 hours of employment can be paid less. These “Starting Out” and “Training” workers must be paid at least 18.80 NZD per hour (around 10.60USD) or 752.00 NZD per 40-hour workweek (around 425 USD).
4. Employee Benefits
In New Zealand, employees are entitled to a number of mandatory benefits, which include things like annual paid leave, sick leave, maternity leave, paternity leave, bereavement leave, and family violence leave. Workers must also receive one 30-minute meal break and two 10-minute rest breaks during each eight-hour day they work.
5. Payroll Tax or Social Contributions
Employers and employees must make retirement contributions to the KiwiSaver program, and employees can choose to contribute between 3% and 10% of their earnings. Employers must contribute by paying the employer superannuation contribution tax (ESCT), which includes KiwiSaver contributions and ranges from 10.5% to 39.0%, depending on the employee’s salary.
Employees must also pay income taxes on their earnings, and employers are responsible for withholding and remitting these taxes. These rates range from 10.5% to 39% of their earnings.
6. Termination and Severance Pay
Employers must provide their employees with good reasons to dismiss them, which can include economic need, gross misconduct, poor performance, or incapacity. There is no nationally mandated minimum notice period. Instead, notice is negotiated in individual or collective agreements, but normally ranges between two to four weeks. Severance pay is not mandatory, but may also be included in these agreements.
7. Foreign Workers
PEOs can help you hire foreign workers and bring them into New Zealand to work for your business. Foreign nationals need to obtain visas with work entitlement, the most common type of which is an Accredited Employer Work Visa (AEWV). If you want to be able to support this kind of visa, you’ll need to perform a labor market test to ensure that a foreign worker is needed for your position. The employee will need a job offer from you and will have to meet minimum experience and qualification requirements.