How to Hire Remote Employees In 

New Zealand

The Basics

Currency
New Zealand Dollar (NZD)
Employer Taxes
3.0%
Payroll Frequency
Monthly
Official Language
Māori, English

Employment in 

New Zealand

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

New Zealand

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in New Zealand can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in New Zealand, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for New Zealand.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in New Zealand is not the same as paying workers in your own country. Employees have to be paid using New Zealand’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

New Zealand

 Specific Information

Working Hours

New Zealand does not have a minimum requirement. Common full-time hours are 7.5 hours to 8.0 hours per day.

Overtime

The hours that are agreed to in an employment agreement are generally the only hours that an employee needs to be present at work.

Overtime hours and pay should be included in the employment agreement.

Many employees receive a payment if their employer asks them to work more than their normal hours.

However, there is no legal requirement to pay more than the regular salary for overtime.

Payroll Tax

Employer

Employer

  • KiwiSaver (minimum employer contribution)

Minimum Wage

New Zealand’s minimum wage is NZD $18.90 per hour.

Payroll

Pay Cycle

Payroll frequency is the Employers choice; however, common frequencies are monthly or bi-weekly (every two weeks).

13th Salary

Not required.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • Almost all employees are entitled to at least 4 weeks’ paid annual leave a year.
  • Casual employees however get 8% holiday pay each pay instead of 4 weeks annual leave.
  • Unused leave is cashed out in cases of termination.

Public Holidays

There are 10 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • Employees are entitled to a minimum of five days paid sick leave a year after the first six months of continuous employment and an additional five days paid sick leave after each subsequent 12-month period. This is paid by the employer.
  •  Sick leave entitlements are not pro-rated in any way. Any employee including part-time employees is entitled to five days’ sick leave a year.
  • Any sick leave owed at employment termination is not paid out.

Maternity Leave

Known as primary care leave, mothers are entitled to 26 weeks of maternity leave and are paid between $177.00 to $585.80 by the government per week before tax.

Paternity Leave

Known a partners leave, a spouse or partner is given one-week unpaid leave after six months of employment and two weeks of unpaid leave after 12 months of employment.

Leave can be taken any time within the period of 21 days before or after the birth.

Parental Leave

Parental leave in New Zealand covers maternity and paternity leave and is comprised of primary care leave, special leave, partners leave, extended leave, and negotiated career leave.

Other Leave

Special Leave-10 days of unpaid leave are given for pregnancy-related appointments.

Extended Leave – This is extended unpaid leave given to parents and depends on the amount of time an employee has worked. 52 extra weeks can be taken for a parent who has been employed for at least 12 months, and 26 weeks is given to a parent who has been employed for at least 6 months.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

In the event of a termination of a local employee, the employee’s salary must be paid:  

An employer must tell their employee in advance when the employer is going to end the employee’s employment (unless the employer is going to dismiss the employee without notice for serious misconduct).

Just because an employment agreement contains a notice period doesn’t mean that the employer can dismiss the employee for any reason as long as they give the appropriate notice.

The employer must still have a good reason and must follow a fair process.

This also includes fixed-term agreements.

Notice Period

The notice period in New Zealand is:

An employee must tell their employer in advance when they want to leave employment (generally outlined in the employment agreement). Depending on the role 2 to 4 weeks’ notice is often seen as fair.

Notice of redundancy

If there is no specific clause in an employment agreement giving a period of notice in a redundancy situation, ‘reasonable notice’ must be given. The length of ‘reasonable notice’ depends on a variety of factors, such as:

  • the reason for the redundancy
  • the employee’s length of service
  • the employee’s seniority and/or remuneration package
  • custom, practice, and industry norms
  • the employee’s ability to find alternative employment

the amount of compensation being paid (if any).

Severance Pay

Severance payments include the hours worked until the final day and any unused annual leave or days in lieu payments.

Additional payments are either specified in the employment agreement or negotiated as a part of the leaving package.

If employees do not receive all components of their payments, they may file a claim for unpaid salary or other breaches of the employment agreement.

Probation Period

Only an employer with 19 or fewer employees (at the beginning of the day on which the employment agreement is entered into) may employ a new employee on a trial period for the first 90 calendar days of their employment.

A valid trial period must be agreed to in the employment agreement before the employee starts work, or the trial period is invalid.

A trial period must have a valid notice period in the employment contract, can be used in any industry and for any job and must be agreed by the employer and employee in good faith – an employee can’t be forced into being employed on a trial period.

Employers can test the skills of a new employee or a current employee moving to a new position through using a probation period. Probation periods can last for any amount of time (the standard length is around three to six months) but the length of time must be recorded in the employment agreement.