Compensation laws vary widely by country, making it difficult to expand without a full understanding of statutory compensation and benefits. On top of any guaranteed benefits, you’ll also need to research what supplemental benefits other employers are providing to stay competitive in the market.
Working with Globalization Partners is one of the easiest ways to meet all of New Zealand’s compensation laws and provide a top-notch benefits package for your employees. When you partner with us, you can spend your time and resources focused on growing your revenue in New Zealand instead of learning all of the country’s employment compliance laws.
New Zealand Compensation Laws
New Zealand has three different minimum wage tiers — adult, starting-out, and training. Employees ages 16 and older qualify for the adult minimum wage, which is NZ$21.20 an hour before tax starting in April 2022. The starting-out wage is NZ$16.96 an hour before tax and covers:
- 16- and 17-year-olds working for one employer for fewer than six months
- 18- and 19-year-olds who meet certain specifications
- 16- to 19-year-olds with an employment agreement requiring 40 credits of industry training a year
The minimum wage for training workers is NZ$16.96 an hour. To qualify as a training worker, the employee needs to be 20 years old or older and have an employment agreement that stipulates at least 60 credits of industry training a year
Guaranteed Benefits in New Zealand
Employees in New Zealand are entitled to a minimum of four weeks of annual leave and may request for up to one week to be cashed. The country also has 11 public holidays where employees are entitled to a paid day off. Employees are also entitled to 10 days of paid sick leave after 6 months of service and another 10 days every 12 months. Although you can provide additional annual leave, we recommend keeping the statutory minimum in mind when determining an employee’s New Zealand benefit management plan.
Employees having a baby or taking permanent responsibility for the care of a child under six, might be entitled to parental leave. Employees who’ve worked for you for at least an average of 10 hours a week for 12 months or more just before the expected birth of the child, or the date they’ll take over the care of the child, are entitled to:
- 52 weeks of unpaid parental leave
- 26 weeks of government-funded parental leave payments if they will be the ‘primary carer’ of a child born (or coming into their care) on or after 1 July 2018.
New Zealand Benefits Management
In addition to New Zealand compensation laws, you’ll also have to consider any supplemental benefits that may not be mandatory but are expected from employees. For example, employees in New Zealand have access to free or low-cost public health care due to government subsidies. Residents also have the option to choose private healthcare, which employers can opt to provide as an additional benefit.
Although not a legal entitlement, many employees expect a certain level of allowances on top of their salary or wages. You can use these to recognize any notable qualities or skills, special responsibilities, or inconvenient job features. If an employee incurs any costs on your behalf, you can use an allowance to reimburse them.
Restrictions for Benefits and Compensation
Collective bargaining agreements (CBAs) aren’t common in New Zealand, but if there is a CBA in place, , you’ll need to meet the minimum terms and conditions of the CBA instead of the statutory minimums.
New Zealand Competitive Benefits Planning
Growing your business in a new country can lead to exciting opportunities with the right planning. Developing benefits packages is one of many processes you’ll need to work through.
New Zealand Employee Benefits Plans
Your benefits plan can be a significant contributor to your success abroad. While you’re legally required to provide specific benefits, additional perks can show your employees that you care about their well-being. When employees feel you care about their well-being in the workplace, morale improves and retention increases.
Extra benefits can also make your open positions more competitive in the labor market. Possible perks include:
- Holiday bonuses
- Educational opportunities
- Transporation allowances
- Health insurance allowance
- Remote work
- Company cars
The labor laws in New Zealand describe a series of benefits employers must provide to their workers. Required provisions include:
- Annual leave
- Public holidays
- Retirement fund contributions
There are several regulations within these requirements, including leave allowances and contribution percentages. Make sure you understand these details to remain compliant.
Designing New Zealand Employee Benefit Plans
Designing a benefits plan can be challenging in any country. While you must account for your company’s financial resources, you want to acknowledge your employees’ needs as well. You can achieve this balance with research and planning.
1. Establish Your Company’s Budget and Goals
Your company needs to stay within its spending abilities when providing benefits. Set an annual budget by projecting your income and accounting for other expenses, like inventory needs and taxes.
You should also use this early planning stage to establish your goals and determine how your benefits can help you meet them. For example, if you aim to improve your company’s retention rate, you can add more benefits to your plan and maintain a smaller workforce.
2. Learn About Your Industry and Employees
Employees are more likely to work for you when they know they’ll be supported in the workplace. You can improve your competitiveness by meeting industry standards and recognizing employees’ needs.
The best way to gain an understanding of expectations is through research. Look into benefits packages at companies similar to yours to identify industry standards. You can learn more about local workers’ needs through interviews and surveys.
3. Design Your Plan
With your budget and research in mind, you can identify the best benefits to include in your plan. Start by allocating funds to the country’s required benefits and use your remaining budget for some of the top perks you identified in your research.
The Average Cost of Benefits
Every company pays a different amount for benefits based on its size and the type of provisions it offers. You should set a benefits budget based on your business’s unique needs. Make sure to factor in your other expenses, like taxes and payroll.
How to Calculate Employee Benefits
Calculations will vary based on the type of benefits you offer, but the labor laws provide some guidance for the required provisions. Retirement fund contributions, for example, have a set percentage for employers.
The compulsory employer contribution requires employers to contribute 3 percent of employee earnings in a KiwiSaver scheme or complying fund.
How Are Employee Benefits Taxed in New Zealand?
New Zealand has a Fringe Benefits Tax (FBT) for specific benefits. Employers are responsible for this tax, and it applies to most provisions outside standard income. There are four categories of FBT:
- Contributions to employee funds
- Provided goods and services
- Provided low-interest loans
- Provided motor vehicles for private use
There are several regulations and exceptions around FBT, so it’s essential to understand whether you owe taxes on your fringe benefits. Be sure to consider FBT as you build your budget.
Employee Health Benefits
With universal health coverage, New Zealand does not require employers to provide health insurance schemes to their workers. The country’s universal system covers inpatient and outpatient services, mental health support, long-term care, and prescription drugs. However, residents are responsible for copayments in some circumstances.
Employers may choose to provide private health insurance to cover copayments and other services not represented under free care.
Turn to Globalization Partners for Employee Benefits Planning in New Zealand
Globalization Partners is ready to support your company’s growth abroad. Our HR and legal professionals understand regulations and expectations in New Zealand and more than 187 other countries. Get in touch with us to learn more.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.