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.
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:
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.
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:
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 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:
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.
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 does not have a minimum requirement. Common full-time hours are 7.5 hours to 8.0 hours per day.
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 frequency is the Employers choice; however, common frequencies are monthly or bi-weekly (every two weeks).
PTO is calculated by the:
There are 10 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
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.
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 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.
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.
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.
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 amount of compensation being paid (if any).
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.
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.