Employer of record in New Zealand: costs, rules and how to hire

A written agreement is compulsory, and the 90-day trial clause has to be in it and signed before the person starts work.

What the employment agreement needs

Every employee needs a written employment agreement, covering the parties, work, location, agreed hours, pay and payment method, and the required problem-resolution explanation. Other mandatory provisions, including public-holiday pay and applicable employee-protection terms, must be addressed, and minimum statutory rights apply even if the agreement omits them.

State the role, work location, normal hours, salary or wage, pay cycle, applicable leave and public-holiday arrangements, along with any fixed term and its genuine reason, notice, probation or trial, availability provisions, and other agreed conditions. Confirm relevant collective coverage and the required employee-protection and problem-resolution wording.

From 21 February 2026, new employees no longer have to begin on applicable collective-agreement terms for the first 30 days. They may agree individual terms from day one or join the relevant collective arrangement. Employers still have union-information duties and must check which agreement covers the work.

Permanent, fixed-term and contractor arrangements

A fixed term needs a genuine work-related reason based on reasonable grounds, recorded in the employment agreement together with the ending arrangement, and a temporary visa or a desire to test the employee is not a sufficient reason by itself. A valid term ends as agreed, while early dismissal needs the applicable dismissal process, and fixed-term employees retain employment rights.

Permanent employment can be full-time or part-time. A casual label should match the actual pattern of work, because regular guaranteed work needs the correct employment terms. A fixed-term employee is still an employee and is different from an independent contractor.

For a contractor, the gateway requires all of its conditions: a written independent-contractor arrangement; permission to work for others outside the contracted work time; freedom over when to work or qualifying subcontracting rights; freedom to decline additional work without ending the arrangement; and a reasonable opportunity for independent advice. If any condition is missing, assess the common-law tests instead.

Trial periods and probation

A valid trial can last up to 90 calendar days at the start of employment for someone who has not worked for that employer before. It must be agreed and signed in the employment agreement before work starts, with the required wording and opportunity for advice, and the employer must give the required notice during the trial. AEWV workers cannot be hired on a trial period.

Probation is different from a statutory trial. Its agreed length must be reasonable for the job and circumstances, and it must be recorded at the start of the new job. It can be used for an existing employee moving roles, but cannot follow a trial period, and normal assessment, support, notice and applicable dismissal requirements remain relevant.

The old restriction of statutory trials to small employers no longer describes the current guidance, though the precise agreement and timing still matter. Trial protection is narrower than a blanket exemption from employment rights, and the employee must be paid throughout.

Confidentiality, intellectual property and restrictions

A restraint of trade must be agreed and reasonable to be enforceable. Scope, duration and geographic limits need review, and there is no universal standard clause suitable for every hire. Distinguish non-competition from non-solicitation and explain confidentiality obligations, and ask the EOR to obtain a local assessment before relying on a restriction.

Ask who owns work product and how any necessary rights pass from the employee through the EOR to your business. Record equipment, confidentiality, data access and post-employment obligations clearly, and have the EOR assess the actual clauses before relying on them.

Misclassification risk, and the new gateway test

New Zealand changed this test this year, so anything written before this year is out of date. From 21 February 2026, a worker meeting every statutory gateway criterion is a specified contractor. The criteria cover the written contractor agreement, freedom to work for others, control over timing or permitted subcontracting, the ability to decline additional work, and the opportunity for independent advice. Source: the approved New Zealand contractor guidance, employment.govt.nz, checked 18 September 2026.

The important word is "every". The gateway is cumulative, so an arrangement that satisfies four of the five criteria is not a specified contractor at all. And the failure does not cut the other way either: if any criterion fails, the common-law assessment still decides status, and failing the gateway does not automatically make the person an employee. Source: the approved New Zealand contractor guidance, checked 18 September 2026.

What a hirer does about it: go through the five criteria as a checklist before you engage anyone as a contractor, and keep the evidence, because the gateway is the cheap way to certainty and the common-law assessment is the expensive one. The criterion most arrangements fail is the freedom to work for others, which is worth deciding on the facts rather than drafting around.

Two dated changes cause most of the confusion here: one that has already taken effect, and one that has passed but does not apply for another two years.

Make the offer and employment arrangement clear

Give the EOR the role, work location, proposed pay, hours, start date and benefit choices. Confirm work permission, KiwiSaver eligibility, payroll details and the written agreement, and give the employee a reasonable chance to review the terms and get advice before signing, especially if a trial clause is proposed.

A start date depends on those checks and the provider's payroll cut-off. Ask for a timetable for this employee rather than relying on a general promise to onboard everyone in a few days.

Check immigration accreditation for an EOR hire

For an Accredited Employer Work Visa, a business placing the worker with a controlling third party needs the appropriate triangular employer accreditation, alongside the relevant job and visa approvals. Standard accreditation alone does not establish eligibility for that arrangement. Confirm the actual employer, permission and role before work starts, and note that AEWV employment agreements cannot include a statutory trial period.

Accreditation is only part of the process. The provider must confirm the current job-check, visa, pay and other requirements for the actual role and worker, because an EOR contract does not create permission to work.

Keep your managers involved in compliance

Agree who handles overtime approvals, leave, workplace concerns, equipment, expenses and performance feedback. Involve the EOR before restructuring, changing the work arrangement or communicating a dismissal, because the client's actions can matter in a triangular-employment grievance.

Prepare for future changes without applying them early

The Employment Leave Act 2026 has passed, but it does not replace the Holidays Act until 6 August 2028. Employers must continue using the current Holidays Act rules and cannot adopt the new minimum scheme early. Prepare payroll and contracts for the future change while keeping current entitlements in place.

The default employee and matching employer KiwiSaver rate is scheduled to rise from 3.5% to 4% on 1 April 2028. Keep that future rate separate from current payroll and any approved temporary rate reduction.

Payroll frequency and variable pay

New Zealand law does not set one compulsory pay frequency or payday. Record the agreed weekly, fortnightly, monthly or other reasonable cycle in the employment agreement or workplace policy. Annual holiday pay is normally due before the holiday unless payment in the normal cycle is agreed, while other paid leave is paid in the relevant pay period.

Write down how commission, bonus, allowances and overtime are earned and paid, making any guaranteed payment and any discretion clear, including treatment when employment ends. Ask the EOR to show the employee's gross pay, deductions and net pay, and explain how variable earnings affect leave pay.

There is no employer social-security charge in New Zealand beyond ACC levies, so KiwiSaver is effectively the whole employer contribution question.

Employer pension contributions and payroll costs

KiwiSaver membership depends on residence and other eligibility conditions. People normally living in New Zealand who are citizens or entitled to stay indefinitely can qualify, while temporary work, visitor and student visa holders cannot join. Automatic enrolment, opting in and the employer's contribution duty are separate checks, and eligible 16- and 17-year-old members receive employer contributions from April 2026.

From paydays on or after 1 April 2026, the default employee rate and minimum employer KiwiSaver contribution are 3.5% of gross salary or wages for qualifying contributing members. Compulsory employer coverage generally includes ages 16 to under 65, with scheme and other conditions. An approved temporary employee reduction to 3% allows the employer to match 3%, and a higher employee election does not automatically require a higher employer match.

The normal employee deduction options are 3.5%, 4%, 6%, 8% or 10%, and an approved temporary reduction can allow 3% for 3 to 12 months. The employer may match that reduction, then must restore at least the required minimum when it ends. Keep any contribution suspension or special arrangement documented.

Employer superannuation contribution tax is generally deducted from the employer's KiwiSaver or complying-fund contribution. The employee-specific ESCT rate depends on earnings and service, so it is not a tax percentage charged on the employee's whole salary. Current thresholds from April 2025 use rates of 10.5%, 17.5%, 30%, 33% and 39%, and an agreed PAYE treatment is an alternative.

ESCT thresholds use the relevant employee earnings and service calculation. Do not choose a rate from the salary alone without following IRD's method, and do not mistake the net amount received by the fund for the gross employer contribution.

Use the EOR employing business's actual ACC assessment in the quote. ACC's confirmed average Work levy for 2026/27 is NZ$0.69 per NZ$100 of liable earnings excluding GST, but an average is not the rate payable by every employer, and industry classification and the applicable assessment matter. Keep employer levies separate from employee ACC deductions.

Income tax, ACC and take-home pay

Income tax runs on five marginal bands applied through PAYE.

These annual bands apply from 1 April 2025. PAYE deductions depend on the employee's tax code and circumstances, and the top band is not a flat rate on all salary.

For 1 April 2026 to 31 March 2027, the employee ACC earners' levy is 1.75% including GST, on liable earnings up to NZ$156,641, with a maximum of NZ$2,741.22. This employee deduction is separate from the employing business's work-related ACC levies.

The EOR should use the employee's correct tax code and apply any other required deductions. Gross salary, take-home pay and the total employer cost are different figures, and the quote should make those differences easy to follow.

New Zealand sets no compulsory pay cycle and no universal overtime premium, so the employment agreement carries more of the payroll rules than the statute does.

Working hours and overtime

Employment agreements must normally fix ordinary maximum hours at no more than 40 weekly, excluding overtime, unless the parties agree otherwise, so there is no universal 40-hour cap on all work. Record the actual hours, overtime treatment and any availability requirements, and note that minimum wage and health-and-safety duties continue to apply.

Ordinary overtime pay is agreed in the employment agreement, and there is no universal time-and-a-half premium for all overtime, though every hour must still meet minimum wage. Availability outside guaranteed hours needs a valid clause, genuine reasons and reasonable compensation, and public-holiday work has separate statutory premium and alternative-holiday rules.

If additional availability or shift cancellation is part of the role, ask the EOR to check the agreement's guaranteed hours, notice and compensation provisions. Your managers should keep accurate records of time worked and avoid unsafe hours.

Rest and meal breaks

Employees generally receive paid rest breaks of at least 10 minutes and unpaid meal breaks of at least 30 minutes, with the number depending on the work period. For a period over 6 but under 10 hours, the minimum is two 10-minute paid rests and one 30-minute unpaid meal break. Specific essential-service and other legal exceptions need checking.

Annual holidays arrive in whole weeks rather than accruing by the hour, which is the single most common source of payroll error here.

Annual holidays and how they are paid

Employees become entitled to at least 4 weeks of paid annual holidays after 12 months of continuous employment, and after each further 12 months. A week reflects the person's working pattern rather than always being 5 days. Leave in advance can be agreed, and the current law does not accrue a statutory hourly leave balance from day one.

Annual holiday pay is normally the greater of ordinary weekly pay at the start of leave or average weekly earnings over the preceding 12 months, so variable pay and what counts as gross earnings matter. Special calculations apply after parental leave and in other cases. An 8% pay-as-you-go arrangement is limited to qualifying situations and is not a general replacement for 4 weeks off.

For a regular 5-day week, 4 weeks usually means 20 working days, and for a regular 3-day week it means 12. The entitlement follows the working week, so changes in hours and days need careful treatment, and a payroll display of accrued hours does not replace the legal calculation.

Public holidays and regional anniversary days

New Zealand has 11 national public holidays plus the applicable provincial anniversary day. Paid time off depends on whether the day would otherwise be worked. Working on a holiday normally requires at least time-and-a-half and an alternative holiday when it is an otherwise working day, subject to the rules, and weekend observance depends on the employee's work pattern rather than giving two holidays for the same occasion.

For an employee who ordinarily works Monday to Friday and does not normally work weekends, the 2026 national observed dates are listed below. Confirm the applicable provincial anniversary separately using local guidance, and note that employees who normally work weekends can observe some holidays on the actual date instead.

Do not assume every public holiday is paid for every employee. First establish whether it is an otherwise working day. Working on that day also needs the correct premium and, where eligible, an alternative holiday, and paying the premium does not replace the alternative-holiday entitlement.

Sick, bereavement and family violence leave

Eligible employees receive 10 paid sick days yearly after the 6-month continuous-service or qualifying-hours test, and this applies to part-time staff without prorating the 10-day entitlement. Leave can cover the employee, their partner, children or dependants. Unused leave can accumulate to 20 days under the minimum scheme, and payment and medical-evidence rules apply.

After the qualifying 6-month service or hours test, the minimum is 3 paid days for an immediate-family bereavement or qualifying miscarriage or stillbirth circumstances, and another bereavement can give at least one day where the employer accepts it under the statutory considerations. The entitlement is per qualifying bereavement rather than a single annual 3-day allowance.

Eligible employees affected by family violence, including where a child living with them is affected, can take up to 10 paid days after the qualifying 6-month service or hours test. It is separate from sick leave, and unused entitlement does not carry to the following year or get paid out on departure.

These are separate entitlements. The qualifying hours test generally looks for an average of 10 weekly hours over the required 6 months, with at least one hour each week or 40 hours each month. The EOR should confirm the test for the particular leave and calculate the pay correctly.

Parental leave and government payments

An eligible primary carer who averaged at least 10 weekly hours with the same employer for 6 months can normally take up to 26 weeks of parental leave, while the 12-month test can allow up to 52 weeks, usually 26 primary-carer weeks plus extended leave. Sharing and eligibility rules apply, and this protected time off is separate from Inland Revenue payments.

Eligible primary carers can receive up to 26 weeks of government parental leave payments. For employees, the work test generally uses an average of at least 10 hours weekly for any 26 of the preceding 52 weeks, with relevant due-date or care-date rules. The payment is based on earnings and capped at NZ$811.05 gross weekly from 1 July 2026 to 30 June 2027, and it is not automatically full salary paid by the employer.

Eligible partners who averaged at least 10 hours weekly with the same employer for 6 months can take one unpaid week around the birth or start of care, and the 12-month test gives 2 unpaid weeks. Partner's leave does not itself attract Inland Revenue parental payments, though an employer may agree paid leave or better terms.

Pregnant employees can take up to 10 unpaid days of special leave for pregnancy-related reasons such as antenatal classes, scans and midwife appointments, additional to parental leave. Confirm the request and any more favourable contractual pay arrangements with the EOR.

Do not promise that every parent gets 52 paid weeks. Leave from the employer and payments from Inland Revenue have different eligibility tests, and parental leave can be shared under the applicable rules. Agree any employer top-up, benefit continuation and return-to-work plan separately.

Extra benefits to include in the offer

Discuss extra annual leave, health or income-protection insurance, enhanced retirement contributions, parental-pay top-ups, training and home-working support. Ask for the price, eligibility, waiting periods and exit treatment of each option, and keep these agreed benefits distinct from the statutory minimums and any future 2028 scheme.