A Guide to Employer of Record Services in New Zealand
Why New Zealand?
Reasons to expand into New Zealand are plentiful. With an economy traditionally focused around manufacturing, agriculture and mining, the boom of the services sector has brought renewed business interest to New Zealand and today service-related industry accounts for 63% of all GDP activities. Construction, retail and transport and logistics industries also witnessed robust recent year-on-year growth, and GDP is very strong in relation to the country’s small population.
In human terms, New Zealand is viewed as a fair, honest and reliable society, ranked first in the world for Social Progression of its citizens and also on the Corruption Perceptions Index. The country benefits from the influence and heritage of the indigenous Maori people, whose customs, art, hospitality and sense of community are the bedrock of New Zealand culture.
New Zealand was voted number one in the world for ease of doing business by the World Bank in 2017 and is attractive for its strong trade links, facilitative government, stability and accessible corporate environment. Whether you are looking for a strategic hub in the wider ASIAPAC region, or to test the waters for a standalone local enterprise, an Employer of Record service in New Zealand can provide you with a local presence in record time and at minimal cost, no matter the size of your organisation.
Employer of Record (EoR) Services in New Zealand
Employer of Record is known by many names – you may be familiar with the concept of PEO, or Global Workforce Solutions (GWS). For a handy guide to untangling the different terminologies, click here.
Utilising an Employer of Record/GWS in New Zealand is designed to help you employ staff locally without the need for your own existing local entity – this could be on an interim basis while you set up your own company, or permanently depending on your requirement. This type of service can be used for local New Zealand nationals, or expatriates provided they qualify for local right-to-work. The idea is that a legal employer like Mauve takes on employment responsibility for the worker via its own New Zealand-registered entity Mauve Corporate Systems New Zealand Ltd, payrolling the worker and ensuring full compliance with local labour and taxation legislation – this concept allows you to focus on day-to-day operations and management of the individual.
Key Benefits of an EoR/GWS Solution in New Zealand
Local Expertise – Our own global expansion has provided us with first-hand knowledge on the challenges of employing overseas. Using a GWS provider like Mauve means you are supported by a leading network of local experts in fields such as accountancy, legal and compliance.
Save Time – Organisations require rapid deployment of staff to optimise an overseas project’s success. Onboarding in New Zealand is rapid under a GWS with none of the associated red-tape and lengthy timescales of entity set-up.
Save Money – An overseas project’s success is measured by its profitability; using a GWS in New Zealand makes a project more financially viable by saving costs related to entity set-up, payroll and taxation, foreign exchange and immigration (if a local national).
Contract Management – Employment law is complex and varies by country; non-compliance is heavily penalised. The in-house contracts team within an Employer of Record like Mauve work with New Zealand lawyers and templates to ensure compliant provisions for benefits, terminations and transitions.
Employing Staff in New Zealand: 5 Key Facts
Working Hours: There are no standard working hours in New Zealand. The Minimum Wage Act sets out a maximum 40 hour, 5-day work week. Most businesses operate Monday to Friday, 8:00 a.m. to 5:00 p.m., with a 30-60-minute lunch break.
Minimum Wage: Minimum pay rates must be paid to all employees. The current minimum wage is NZ$ 16.50 per hour for all types of workers except trainees, who should receive no less than NZ$13.20.
Probationary Period: Employers can include a trial period of up to 90 days in an employment offer, provided they have been agreed in writing and negotiated in good faith as part of the employment agreement. Employees on trial periods are entitled to all other minimum employment rights. Trial periods are voluntary.
Contract Types: Every employee must have a written employment agreement. This can be either an individual agreement or a collective agreement. Collective employment agreements are negotiated in good faith between an employer and a registered union on behalf of their members. There are some legally-required inclusions of the employment agreement, so external contracts should be checked to ensure they meet the necessary provisions.
Employers can offer fixed-term employment if there are genuine reasons such as seasonal or project work, or if the employee is temporarily filling in for a permanent employee on leave. The employer must make the employee aware of the reasons for fixed-term employment, how or when the employment will end, and the employee must agree to the same in the employment agreement. All types of employment agreement should be concluded in writing.
Vacation Entitlement: Employees are entitled to four weeks of paid annual holidays at the successful completion of a continuous year of employment with one employer. Annual holidays are paid at 8% of the employee’s gross earnings if they leave before completing a full year of employment. This figure is less any holiday pay already received. Employees can request in writing to sell back one week of their annual holiday per year – employers cannot pressure employees to do this nor include such requests in employment agreements. Employees are entitled to 11 paid public holidays, provided the holidays fall on days when the employee would normally work. Time-and-a-half is due to any employee who works a public holiday.
Payroll, Tax and Compliance
Employees should be placed on a local payroll and their net salaries paid monthly into a local bank account in New Zealand, in the local currency of New Zealand dollar. New Zealand does not have a social security system requiring compulsory contributions – but employees should have an Inland Revenue Department (IRD) number. Expatriates should apply for this as soon as the work visa is obtained.
Income tax is levied at 10.5% – 33% according to income earned; an Earners’ Levy is also payable which is currently set at 1.45%. Taxes are deducted and paid to the IRD on a monthly basis, and the tax year in New Zealand runs from the 1st April to the 31st March of the following calendar year. KiwiSaver is a voluntary work-based savings scheme to which employees can contribute 3%, 4% or 8% of their gross salary or wages – the default contribution rate for new employee members is 3%. The employer is required to match the employee’s contributions – the fund is generally only accessible after age 65, but employees can also use it as a first-home deposit.
All expatriates wishing to work in New Zealand require a work visa. Applicants may apply for work visas if they hold an offer of employment from a New Zealand company for which they are suitably qualified by training and/or experience, and there are no suitable New Zealanders available.
Ordinarily we advise making the application for the work visa in person at the New Zealand Embassy/Consulate of the applicant’s home country or country of legal residence, as this means the work visa will be in place on arrival into the country and enables each individual to start work immediately. If the visa is granted with travel conditions for multiple entry, this will allow the applicant to enter or re-enter New Zealand. Alternatively, the worker can enter New Zealand on a visa waiver or visitor’s visa for business purposes – if this is the case, the application for the work visa can be made (once again in person) at the local Immigration New Zealand office where the applicant is residing in person – the work visa is then endorsed in the passport.
Should you require Mauve’s immigration services, we have a local licensed immigration advisor in New Zealand who can assist with all work visa applications. The processing time for a work visa is approximately 21- 30 days (once all the information/ documents have been collated and the application has been submitted) depending on the issuing Immigration New Zealand office where the application is made.
An Employer of Record/GWS service can be the ideal choice for companies of any size requiring rapid entry into the New Zealand market, or to ensure compliant employment of their workers locally. Mauve’s local New Zealand representative Ashleigh Duncan is an expert on local conditions and can provide further information on EoR services in-country; contact her at email@example.com, or get in touch via the Contact Form.
The information provided has been checked for accuracy as of the date of publication, and is intended as a general guide and for information purposes. It is subject to unanticipated and unexpected changes and does not constitute legal advice.