A guide to Employer of Record services in New Zealand
Why New Zealand?
Are you thinking of expanding your business into New Zealand? Reasons to do so are certainly plentiful. With an economy traditionally focused around manufacturing, agriculture, and mining, the services sector boom has brought renewed business interest to New Zealand. And today, service-related industry accounts for roughly two thirds of all GDP activities.
In human terms, New Zealand was rated second most democratic country in the world in 2021, as well as having the world’s lowest perceived rate of corruption. The country benefits from the influence and heritage of the indigenous Māori people; whose customs, art, hospitality, and sense of community form the bedrock of New Zealand’s culture.
New Zealand remains number one in the world for ease of doing business and is attractive for its strong trade links, facilitative government, stability, and accessible corporate environment. Whether you’re looking for a strategic hub in the wider ASIA-PAC region, or to test the waters for a standalone local enterprise, an Employer of Record (EoR) 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
Utilising an Employer of Record (EoR) 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. You can implement this type of service for local New Zealand nationals, or expatriates provided they qualify for local right-to-work.
The idea is that a legal employer like Mauve Group 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 leaves you free to focus on day-to-day operations and management of the individual.
Key benefits of an EoR Solution in New Zealand
Our own global expansion has provided us with first-hand knowledge on the challenges of employing overseas. Using an EoR provider like Mauve Group means you’re supported by a leading network of local experts in fields such as accountancy, legal, and compliance.
Organisations require rapid deployment of staff, to optimise the success of overseas project’s. Onboarding in New Zealand is rapid under a EoR, with none of the associated red-tape and lengthy timescales of entity set-up.
An overseas project’s success is measured by its profitability; using an EoR in New Zealand makes a project more financially viable, as you save on costs related to entity set-up, payroll and taxation, foreign exchange, and immigration (if a local national).
Employment law is complex and varies by country; non-compliance is heavily penalised. An in-house Contracts team within an Employer of Record (EoR) provider - like Mauve Group - works with lawyers in New Zealand and templates to ensure compliant provisions for benefits, terminations, and transitions.
Employing staff in New Zealand: Five key facts
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 to 60-minute lunch break.
Minimum pay rates must be paid to all employees. As of 1st April 2023, the adult minimum wage increased from NZ$21.20 to NZ$22.70 per hour. The minimum wage for trainees increased from NZ$16.96 to NZ$18.16 per hour.
Employers can include a trial period of up to 90 days in an employment offer, provided they’ve 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.
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.
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.
Employees can request in writing to sell back one week of their annual holiday per year – employers can neither pressure employees to do this, nor include such requests in employment agreements. Employees are entitled to 12 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, 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% to 33%, according to income earned; an Earners’ Levy is also payable, which is currently set at 1.53%. Taxes are deducted and paid to the IRD on a monthly basis, and the tax year in New Zealand runs from 1st April to 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 the 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.
The processing time for a work visa is approximately 21 to 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 (EoR) 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. For more on how Mauve Group can help your business, contact us and speak to a member of our expert team.
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