Contract Types

Contracts in New Zealand can be Fixed term or Indefinite.

Probation

There are 2 kinds of probation periods in New Zealand, trial and probation. Trial can be up to 90 calendar days if agreed by both parties and is used the first time the employee has been employed by this employer. Probation can be used when an existing employee starts a different job and can be up to 180 days and must be included in the employment contract. Employees on trial have no grounds for unfair dismissal whereas those on probation may make a case in the event of dismissal.

Working Hours

Employees usually work 7.5 to 8 hours per day, 40 hours per week.

Overtime

Overtime should be stipulated in the contract but is usually paid at the rate of 150% and mandated at this rate for working on public holidays.

Other Financial

Monthly or bi-weekly payroll. There are no requirements for a 13th month salary.

Tax rates valid for: 2024

Corporation Tax: 28%

Consumption Tax: 15%

Employers’ Kiwisaver Contribution:

3% Subject to Employer’s Superannuation Contribution Tax at rates and thresholds similar to the personal tax rates

Employees’ Contributions: 3% to Kiwisaver

Income Tax Rates

• 0 to 14,000 NZ$ – 10.50%
• 14,001 to 48,000 NZ$ – 17.50%
• 48,001 to 70,000 NZ$ – 30%
• 70,001 to 180,000 NZ$ – 33%
• Over 180,001 NZ$ – 39%

Notice

The notice period should be stated in the employment contract but is usually 4 weeks.

Employers may pay in lieu of notice if this is agreed in the contract.

Process

Unless termination is for reasons such as gross misconduct, then the appropriate notice should be given. There should always be a good reason for dismissal including for employees on fixed term contracts.

Employees should also be given a reason for termination in writing if they request this.

In cases of redundancy there is a defined process to follow.

Severance Pay

There is no mandatory severance pay in New Zealand, though some employment contracts will specify the pay applicable.

During Trial

Employees can be dismissed with the notice period specified in the contract, so long as notice is given before the trial period ends.

National Public Holidays: 11

New Year’s Day – 1st January 2024

Day Given in Lieu – Yes           

Day after New Year’s Day – 4th January 2024

Day Given in Lieu – Yes

Waitangi Day – 6th February 2024

Day Given in Lieu – Yes

Good Friday – 29th March 2024

Day Given in Lieu – NA

Easter Monday – 1st April 2024

Day Given in Lieu – NA

ANZAC Day – 25th April 2024

Day Given in Lieu – Yes

King’s Birthday – 3rd June 2024

Day Given in Lieu – NA

Matarki – 28th June 2024

Day Given in Lieu – NA

Labour Day – 28th October 2024

Day Given in Lieu – NA

Christmas Day – 25th December 2024

Day Given in Lieu – Yes           

Boxing Day – 26th December 2024

Day Given in Lieu – Yes

Comment: If an employee works on a public holiday that would otherwise have been a working day, then the employee receives an alternative holiday.

Paid legal entitlement

New Zealanders are entitled to 20 days’ paid leave after 12 months of employment. Those on a fixed term contract for less than 12 months receive 8% holiday pay instead.

Carry over permitted

The law allows for employees to carry over unused holiday which can be cashed out at termination. Employees may request that 5 days of carried over holiday be paid out in the following holiday year. The employer does not have to agree to this unless it is in the Company policies and procedures or in the contract. Employers cannot pay out carried over holiday unless the employee requests it. An employee must under all circumstances have 15 days’ leave entitlement for the year before any carry over is paid out.

Sick

Employees are entitled to 10 days’ paid sick leave after 6 months of service. Employees can carry over 10 days per year of sick leave up to a maximum of 20 days of current entitlement in any year. Employees can also take sick leave to care for a dependent. Sick leave cannot be cashed in unless the employment agreement allows for this. Sick leave is not pro rated, thus even an employee who works 3 days a week will be entitled to 10 days’ sick leave per year.

Maternity

Employees with 6 months’ service are entitled to 26 weeks “primary carer” leave which is paid for by the government up to a maximum of $712.17 gross per week. An additional 52 weeks “extended leave” is available which can be shared between the parents and is subject to deduction of the amount of primary carer leave already taken.

Employees are also entitled to 10 days special unpaid leave for pregnancy- related appointments such as ante natal classes, or hospital appointments.

Primary carer leave is available to all employees who have the primary responsibility for care. In cases of surrogacy both the birth mother and primary carer have the same entitlement.

The leave starts on the date of birth but can commence 6 weeks earlier for pregnant employees. If leave starts before the due date the employee is always entitled to 20 weeks after the birth even if this means the leave taken is in excess of 26 weeks.

This leave can have an impact on the amount an employee will receive whilst on annual leave as their average pay in the preceding period will be less than a normal employee.

Paternity

New fathers are entitled to 1 week of unpaid leave after 6 months’ employment and 2 weeks’ unpaid leave after 12 months’ employment which can be taken within 21 days before or after the birth.

Bereavement

Employees are entitled to a minimum of 3 days’ leave in the event of the death of an immediate family member and 1 day for more distant relatives or associates. They are also entitled to 3 days’ leave in the event of a stillbirth or miscarriage.

Family Violence Leave

Employees are entitled to 10 days’ paid leave if the employee has worked for more than 10 hours per week for over 6 months. The leave can be taken regardless of when the domestic violence occurred, even if it is before the employee joined the current employer, or before 2019 when the law changed. Employees can also request short term flexible working arrangements under such circumstances.

General Election Leave

Employees must be allowed to leave at 3.00pm to vote, or otherwise given 2 hours off.

Medical

Private medical insurance is commonly offered by competitive employers. For small companies without the headcount for a group policy, private medical is usually provided by way of an allowance to cover the costs. Note that insurance brokers in New Zealand charge a setup fee (c. 2500$) for group policies.

Life

It is common for competitive employers to provide life insurance.

Pensions

In addition to the state pension, it is mandatory in New Zealand to offer employees the chance to pay in to the KiwiSaver scheme. If an employee opts into this, and is eligible, the employer must also make contributions. The minimum is 3% from employee and employer, but both can choose to make higher contributions (4%, 6%, 8% or 10%).