How to use an Employer of Record in New Zealand

From cost savings to employee productivity, there are many benefits to hiring globally distributed teams. But to hire employees abroad, you'll have to open a legal entity in the country of hiring, which is time-consuming and expensive. You’ll also need to have a strong grip on local labor and tax laws and stay in compliance with employment legislation. 

Even after you’re set up to hire Kiwis, there are many employment regulations in New Zealand to keep track of. Additionally, you’ll have to take on the burden of handling various HR functions and admin related to employee management.

The easiest and most secure way to hire employees in New Zealand is to choose an employer of record (EOR) service that can do all the heavy lifting for you. An EOR has its own local entity in New Zealand and can hire and pay employees in the country on your behalf while meeting essential obligations related to employment law and payroll taxes.

This article explains how you can use an EOR to expand your team in New Zealand so that you don't have to stress about compliance or opening your own entity.

Ready to learn more? Let’s dive in.

Six steps to hiring employees in New Zealand using an employer of record

Working with an EOR can help reduce your workload when you’re hiring internationally. But there’s a lot of research needed to make sure you choose the EOR that’ll help you grow your team while staying compliant with New Zealand’s employment laws.

Some considerations you need to think about in a potential EOR are:

• the features or services you need

• the quality of services the EOR offers (measured by customer sentiment around a potential EOR provider)

• how to get the best value for your budget.

Step 1: Weigh up the pros and cons of each potential partner

Your chosen EOR has to make your life easier, so vet them based on the features they offer. Think about how much does the potential employer of record simplify hiring in New Zealand. You need to measure if and how well they offer features like:

• Managing payroll and ensuring employees and contractors get paid on time

• A comprehensive benefits and perks solution

• An engaging onboarding experience

• Legal support with interpreting and navigating local labor laws

• Compliance with changing employment legislation

• Simplified paperwork management for collecting and filing documents with the authorities

• Intellectual property protection and quality data security

Score each potential employer of record you’re considering against the above features and see which providers meet your business needs. Your shortlisted EORs must have the services and infrastructure to help you hire employees and manage all the admin involved in building an international team in New Zealand.

Step 2: Select the most appropriate EOR service provider 

Ensure that your EOR owns its own entity in New Zealand, rather than outsource services to local agencies or external providers. And while it may seem convenient for the EOR to depend on third-parties for certain services, it can end up being pricier for you. Plus, there’s no guarantee that these far-removed agency partners have the systems needed to protect your intellectual property and your data.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Read reviews of your selected EOR providers on websites like G2 and Trustpilot. This will give you a feel of the customer sentiment around potential EOR providers. Reviewing online testimonials and press coverage of the EOR will also give you insights into the EOR's operations and how they treat clients.

Step 4: Ensure that the EOR provides the best-in-class employee experience

An EOR should pay salaries and invoices on time, onboard new hires seamlessly, and provide explanations for any taxes or levies withheld from your employees’ paychecks. Since the EOR hires on your behalf, you have to ensure that they are treating your employees well and giving them a high-quality employee experience.

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package

Figuring out a salary for a remote role can be tricky. You have to offer market rates and match the local cost of living, experience level, and skill level you’re hiring for. An employer of record can help you find a balance between all these variables and figure out a competitive and locally compliant benefits package.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Nvidia, Experian, Cisco, and Intel: there’s always another technology giant hit with ransomware or getting hacked every other week. Hackers love companies like EORs that process lots of sensitive data. That's why it's essential to choose an EOR that has solid security certifications in place to protect your data.

Hire and pay your global team with speed and security

Start using Remote’s employer of record services and local entities to avoid the time, cost, and risk of building your own.

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What are the benefits of using an employer of record in New Zealand?

Remote work makes it possible for companies to hire smart people anywhere in the world. But only if you can handle layers of government regulation designed to protect employees from abuse. While employee protections are good, it does make your job more challenging as an employer who is looking to hire internationally.

That’s where an employer of record comes in: an EOR handles all the legal and administrative work that’s part of global hiring — in New Zealand and across the world.

An EOR helps you focus on growing your business by:

• Setting up quick and engaging onboarding for new employees

• Offering advisory support on setting rates, salaries, retainers, etc.

• Administering modern benefits that can be customized to fit your budget and your employees’ needs

• Making sure employees and contractors are paid on schedule

• Proving legal support with local employment laws

• Securing intellectual property protections and protecting your internal data

Instead of hiring a separate HR department to handle the technicalities of maternity leave in New Zealand or trying to figure out how much you’ll pay for overtime — you can simply rely on an HR to manage HR functions. An employer of record in New Zealand can help you hire workers compliantly, leaving you to focus on your core business without worrying about breaking the law.

How much does it cost to use an EOR in New Zealand?

The cost of using an EOR in New Zealand varies depending on the services offered by the EOR, the location of your workers, and the number of workers.

On one hand, there are legacy EOR operators that support a large network of countries. These providers can charge hefty enterprise rates upwards of $2,000 per employee, per month. On the other hand, smaller EOR providers might charge less but may not guarantee strong protections for your data security and intellectual property, or even help with essentials like payroll and benefits. You might rake up costs by using other providers for different services, such as Wise for international payroll, Nayya for health insurance, etc.

Many EOR providers are not transparent about their fees either, and there may be hidden costs in the end that could come as a surprise to you.

Your best bet is to go with a reasonably priced EOR that covers everything you need to build a global team. 

Remote offers a comprehensive employer of record experience for a low flat-rate fee. We can help you manage your international payroll and benefits, onboard employees, secure your intellectual property and operational data, and guide you through every aspect of global hiring. 

But don’t take our word for it: here’s a breakdown of how Remote compares to the major contenders in the EOR space.

Hiring in New Zealand

New Zealand is considered a worker’s paradise and was the first country to introduce pensions for the elderly. The worker-first philosophy frames much of the country’s core labor legislation — New Zealand’s Employment Relations Act.

It’s important to figure out how these rules work in practice and what it demands in terms of compliance, benefits, classifying employees, and respecting the rights of protected worker classes in New Zealand.

Employment contracts and agreements in New Zealand

Employment agreements must be in writing and must contain relevant information such as:

• The names of the employer and the employee

• A job description

• A designated workplace (for in-office work)

• Working hours, start and finish times, and working days

• Effective salary and how an employee will be paid (cash, equity, or some other token)

• A plain explanation of how to resolve employment relationship problems, including advice that personal grievances must be raised within 90 days

• An agreement to pay at least 150% of their normal rate for having an employee work on a public holiday

• Employment protection provisions if the employer’s business is sold or transferred, or if the employee’s work is contracted out

• Employment terms, i.e., either part-time or full-time

• Additional information about trial periods, probation agreements, availability, etc

A written agreement is required under law, and employers can be fined $1,000 per employee for failing to provide one.

Labor compliance in New Zealand

New Zealand takes labor compliance seriously and enforces several standards designed to maintain workers' rights and prevent exploitation and ill-treatment.

Flouting one of these laws can trigger legal action and attract fines, a ban on hiring (specific worker classes) in New Zealand, and up to seven years in prison for severe cases like migrant exploitation.

Here are some best practices that can help you avoid breaking New Zealand’s labor laws.

• Proactively protect employees from discrimination or harassment due to their age, sex, political affiliation, disability, national origin, union membership, etc.

• Make sure employment agreements are clearly stated in writing

• Don’t pressure employees to join or desist from joining a union

• Pay salaries and invoices on time

• Make sure employees are compensated for any overtime work

• Protect employees from unreasonable or unfair dismissal, i.e., make sure employees are only dismissed for just cause and make sure that severance benefits are paid out

• Provide dignified and safe working conditions

A trusted employer of record can help you navigate New Zealand’s employment laws so that you can focus on hiring the best talent without worrying about managing payroll, benefits, or losing your intellectual property protections.

Payroll and payroll taxes in New Zealand

Employees pay an optional pension contribution (KiwiSaver: 3 – 10%) and an accident compensation fee (1.39%). Employers also pay an optional (workers can opt in or out) pension contribution (3%) plus a 1% accident compensation premium.

Employment benefits and compensation in New Zealand

Kiwi law specifies several statutory benefits you’re required to offer your employees, whether it’s stated in the employment contract or not. 

Maternity and paternity leave

Expectant mothers are entitled to 26 weeks of paid leave (benefits are paid by the government) starting six weeks before the due date; employees who suffer a miscarriage or stillbirth can take three days of paid leave off work.

Fathers are entitled to one week of unpaid paternity leave if they’ve been employed for six months, and two weeks off if they’ve been working for an employer for 12 months.

Vacations & public holidays

Employees are equally entitled to four weeks of paid annual vacation, in addition to 11 days of paid public holidays

Healthcare

New Zealand’s public healthcare system provides universal coverage, although employers can sign their employees up for private health insurance to minimize wait times. Remote can help you roll out custom benefits that’ll build better work-life balance and promote loyalty with your Kiwi employees.

New Zealand severance pay and employee terminations

New Zealand employees can only be terminated for just cause and only after every other remedy has been attempted, including trying to transfer an employee to a different location or assigning them to a different role. 

Employees can request an explanation for their dismissal in writing within 60 days of being let go, which an employer is required to answer within 14 days.

Severance payments depend on what was agreed upon in an employment agreement or as part of a redundancy package.

Our guide to employing in New Zealand goes into more detail, explaining how the relevant labor laws apply and how you can navigate a termination without breaking the law.

Other benefits that Remote can help you roll out

Remote can help you roll out a supplementary global benefits package that’ll help you attract and retain the best talent. 

Remote exists because we believe visionary companies should be able to hire anyone across the world. And compensate them very well for their work. To make it happen, we offer a wide variety of benefits you can roll out for your remote employees, such as:

• Medical insurance 

• Dental and vision insurance

• A flexible pension scheme

• 401k retirement accounts

• Life insurance

• Paid vacation.

Learn more about how Remote can help your company scale international hiring and grow your team efficiently.

New Zealand —

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Employee benefits in New Zealand: All you need to know

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What are the risks of employee misclassification in New Zealand?

While hiring workers in New Zealand, you’ll have to be careful about assigning the right worker classification status. If your worker is classified as a contractor but starts taking on the duties of an employee, the employment relationship changes and this could be construed as worker misclassification by the authorities. 

There are penalties for misclassifying your workers, and it could also land your company in legal trouble and lead to reputational damage. More specifically, misclassifying employees attracts fines of up to NZ$ 30,000 and having to pay PAYE, and any holiday and leave entitlements owed.

Remote’s expert team has in-depth knowledge of employment laws in New Zealand and can help you classify your workers correctly and mitigate the risks of misclassification.

Contractor Management —

11 min

When should you convert a contractor to an employee?

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Get started with an employer of record for New Zealand

As you scale your team in New Zealand or anywhere across the world, you’ll need a reliable EOR partner to handle the cumbersome process of international recruitment. An employer of record can easily set you up with everything you need to hire employees in New Zealand: benefits, payroll, compliance, and security. Quickly, and for a fraction of the price.

A global HR platform like Remote is exactly what you need to build a remote team from scratch. Remote offers a comprehensive HR stack for businesses looking to hire in New Zealand, with everything you need to:

• Onboard employees quickly

• Pay employees and contractors on time

• Secure your intellectual property and operational data

• Stay informed on changes to New Zealand’s labor laws

• Roll out fair and equitable benefits to your employees

Get started with Remote and start onboarding talent in New Zealand in minutes. Or learn more about the most cost-effective, safest, and scalable way to hire employees abroad.

Read Remote's expert guide to hiring in New Zealand

Use our expert hiring guide for information on local benefits, taxation, and compliance requirements to help you employ in New Zealand with ease.

Read now