New Zealand offers a set of mandatory employee benefits aimed at protecting worker rights and promoting well-being. These entitlements cover key areas, including retirement, healthcare, paid leave, and work-related injury compensation. Employers, including those utilizing Employer of Record (EOR) or Professional Employer Organization (PEO) services, must comply with these requirements to ensure employee satisfaction and avoid penalties.
1. KiwiSaver (Retirement Savings Scheme)
Description:
KiwiSaver is New Zealand’s national retirement savings plan, designed to help residents build financial security for retirement. It is a government-backed scheme that provides flexible savings options, making it attractive for both employees and employers.
Employer Contributions:
Employers are required to contribute a minimum of 3% of an employee’s gross salary to their KiwiSaver account.
Employee Contributions:
Employees can choose their contribution rate, with options at 3%, 4%, 6%, 8%, or 10% of their gross income. If they do not specify a rate, the default contribution is set at 3%.
Benefits:
Funds accumulate in an individual savings account, accessible upon retirement or for specific situations like purchasing a first home or in cases of severe financial hardship.
Additional Notes:
KiwiSaver contributions are portable, meaning employees can maintain their KiwiSaver account regardless of changing employers, providing continuity in retirement savings.
2. ACC (Accident Compensation Corporation)
Description:
The ACC scheme provides comprehensive, no-fault accident insurance to cover workplace and non-workplace injuries alike, making it a crucial part of New Zealand’s social safety net.
Employer Contributions:
Employers fund this insurance through ACC levies, covering workplace injury and treatment costs.
Employee Contributions:
Employees also contribute to ACC through payroll deductions, supporting non-workplace injury coverage.
Benefits:
ACC covers medical treatment costs, rehabilitation expenses, and compensates for income lost due to injury or disability.
Additional Notes:
Employers with high injury rates or insufficient workplace safety measures may face higher levies, incentivizing safety improvements.
3. Paid Annual Leave
Description:
Annual leave entitlements allow employees to take paid time off for rest and relaxation.
Employer Obligations:
After 12 months of continuous service, employees are entitled to a minimum of 4 weeks of paid annual leave per year.
Employee Contributions:
There is no employee contribution required for this benefit.
Additional Details:
Unused annual leave can accumulate, and any remaining balance is paid out upon the employee’s termination.
Additional Notes:
Employers can offer additional leave through collective agreements or employment contracts, enhancing job satisfaction and work-life balance.
4. Paid Sick Leave
Description:
New Zealand provides paid sick leave to ensure employees have time to recover from illness without losing income.
Employer Obligations:
Employees are entitled to 10 days of paid sick leave per year after six months of employment.
Employee Contributions:
There is no employee contribution required for sick leave.
Benefits:
Unused sick leave can accumulate up to a maximum of 20 days, providing a safety net for longer-term illnesses.
Additional Notes:
Employers may request a medical certificate for absences exceeding three consecutive days.
5. Parental Leave
Description:
Parental leave entitles eligible employees to time off for childbirth or adoption, promoting family support and job security.
Employer Obligations:
New Zealand offers up to 26 weeks of paid parental leave funded by the government, with the option for additional unpaid leave.
Employee Contributions:
No contributions are required from employees for parental leave benefits.
Benefits:
Parental leave provides financial support to new parents, enabling them to focus on family without impacting long-term career prospects.
Additional Notes:
Leave is flexible, allowing both parents to share leave or alternate according to their needs.
6. Public Holidays
Description:
New Zealand observes 11 statutory public holidays, offering employees paid leave to observe national and cultural events.
Employer Obligations:
Employers must grant paid time off on public holidays, or an alternative day if employees are required to work.
Employee Contributions:
There are no contributions required from employees for public holiday entitlements.
Additional Details:
Public holidays include important days like Christmas, New Year’s Day, and Waitangi Day, celebrating national heritage.
7. Minimum Wage
Description:
Minimum wage laws protect employees’ rights to fair compensation, ensuring a basic standard of living.
Employer Obligations:
Employers must pay employees at least the minimum wage, currently set at NZD 22.70 per hour for adults (as of 2024).
Employee Contributions:
No contributions are required from employees for minimum wage compliance.
Benefits:
Minimum wage laws support fair compensation and contribute to economic stability for low-income workers.
Additional Notes:
Specific rates apply for youth, apprentices, and trainees, allowing flexibility in compensation for varied skill levels.
8. Domestic Violence Leave
Description:
Domestic violence leave allows employees affected by domestic violence to take time off to address related needs without the risk of job loss.
Employer Obligations:
Employers must provide up to 10 days of paid leave annually for employees affected by domestic violence.
Employee Contributions:
There is no employee contribution required.
Benefits:
This leave enables individuals to seek support, such as legal advice or safe housing, while protecting their job security.
Additional Notes:
Employers must maintain confidentiality and privacy for employees utilizing this leave, supporting their safety and well-being.
Using EOR/PEO Services for Compliance
Companies seeking to hire in New Zealand without establishing a legal entity can utilize an EOR or PEO provider, such as GlobainePEO, to manage these benefits and ensure full compliance. These services take on responsibility for payroll, tax deductions, and benefits management, offering businesses a cost-effective way to expand into New Zealand without the complexities of local legal requirements.
For businesses with a New Zealand entity, PEO services can also simplify benefit administration, ensuring streamlined compliance and operational efficiency.
Important Reminders for Employers
Employment laws, benefits rates, and minimum wage standards in New Zealand are subject to periodic updates. Businesses must stay informed and adapt to these changes, ensuring ongoing compliance with the legal standards set to protect employee welfare.