Your guide to payroll in New Zealand

New Zealand payroll comes with its own set of rules. Payroll compliance in New Zealand is mandatory, and getting it wrong can mean IRD penalties, legal hassles, and expensive corrections. 

Payroll management in New Zealand includes managing PAYE tax codes, ACC levies, KiwiSaver contributions, and payday filing, all within stringent deadlines. 

This guide walks you through various employee and employer taxes in New Zealand, including income tax, social security contributions, etc. 

Payoneer Workforce Management, an EOR service, helps pay employees in New Zealand seamlessly and streamlines onboarding, New Zealand payroll processing, and more. 

New Zealand payroll: Wages and other payments

As an employer, you must ensure that you remain compliant with the payroll regulations in New Zealand, just like Australia. Employees in the country are entitled to sick pay, overtime pay, maternity and paternity pay, along with a minimum wage. 

Here are some important details on New Zealand payroll:

Payroll cycle in New Zealand

The payday and payroll cycle in New Zealand is primarily governed by the employment agreements and monitored by the Inland Revenue (IRD) and Employment New Zealand. 

The common payroll cycle in the country is monthly. The pay date in New Zealand is the 2nd last working day of the month. 

Minimum wage

In New Zealand, the payout currency is the New Zealand Dollar (NZD). 

The minimum wage in New Zealand in 2024 was $23.15 per hour. However, from 1st April, 2025, the minimum wage increased to $23.50 per hour. 

Overtime pay

Employees in New Zealand can work overtime hours and get paid for the same. Overtime pay has to be agreed upon by the employee and the employer and must be included in the employment agreement. 

The calculation of the overtime pay depends on the employee’s normal hourly rate. Sometimes the pay is ‘time-and-a-half’, and sometimes it is ‘double time’. The overtime pay is paid along with the monthly salary. 

Sick pay

Employees in New Zealand are entitled to 10 days of sick leave in a year. There is an option for renewing this leave annually. 

Maternity pay

Maternity leave in New Zealand is an integral part of the parental leave in the country. The primary carer (the mother or the father) is entitled to a government-funded paid leave for up to 26 weeks. The partner’s leave is unpaid for 1-2 weeks, depending on the service tenure. 

Parental leave payments are funded by the Inland Revenue. 

Paternity pay

Like maternity leave and pay, paternity leave and pay in New Zealand are covered under the parental leave. The number of days of leave is determined by the tenure of employment of the mother and the partner. 

Severance pay

There is no mandated severance payable in New Zealand. It can only be paid if specified in the employment agreement. 

Payroll in New Zealand: Contributions and deductions

New Zealand payroll is more than what you pay employees in New Zealand. Employers must calculate and make proper tax deductions and social security contributions. 

Getting the financial figures right protects your business and your employees. Here are the common contributions and deductions in New Zealand. 

Income tax

The individual income tax in New Zealand is progressive in nature. The tax ranges from 10.5% to 39%. 

Social security contributions in New Zealand

There are social security contributions in New Zealand by the employee and the employer. Here are the details:

• For the KiwiSaver scheme, the default minimum contribution rate for both the employee and the employer is 3.5%.
• There are accident compensation levies (ACC) at 0.2705%.

You can use the cost calculator for a detailed breakdown of employment costs. 

Other employee benefits

Employees have to pay income and salary tax in New Zealand. However, they are also entitled to some amazing employee benefits. Some of the prominent ones are as follows:

Public health insurance

In New Zealand, public health insurance is mandatory. There is a wide range of services provided in the insurance coverage. Some of them include:

• Hospital care
• Doctor visits
• Prescriptions
• Disability support services
• Maternity care

Earned or annual leave

Employees in New Zealand are entitled to 4 weeks of earned or annual leave in a year. However, to be eligible for this leave, the employee must have continuous employment with the employer for 12 months. 

Annual bonus

There is no mandated annual bonus that employers have to pay employees in New Zealand. 

New Zealand payroll compliance best practices

If you want to reduce penalties and legal hassles, you should maintain complete payroll compliance in New Zealand. 

There are various tax regulations and labor laws that employers have to follow in the country. Enlisted below are some of the best practices for payroll compliance in New Zealand. 

• Before you start processing your first payroll, you must register with the Inland Revenue (IRD) as an employer. Late registration will lead to backdated obligations and penalties. 
• Every employee must have the correct tax code from day one.
• Every time you run a payroll, file the payroll tax returns. The submissions must reach the Inland Revenue.
• You must keep and maintain payroll records, including deductions, wages, leave balance, etc. This is required under the employment law in New Zealand.
• Employees also typically have payslip requirements in New Zealand. You must provide them with the same every month. 
• Review employee KiwiSaver contribution rates and update your payroll software immediately. 
• Reconcile the payroll figures against IRD records at least once monthly for discrepancies before they become complicated. 

Your options for payroll services in New Zealand

If you aim to minimize employment costs in New Zealand, along with managing effective onboarding, payroll, and workforce management, you can choose from the three options below:

• Set up a local entity in the country: By setting up a local entity in New Zealand, the business can make a legal presence. This process is a time-consuming one and might not be a suitable option for all businesses. 
• Hiring independent contractors: You can hire independent contractors in New Zealand instead of hiring full-time employees. This recruitment is mainly for completing specific tasks or projects, and the contractors get their remuneration at the end of the task. However, there might be misclassification risks. 
• Partner with an EOR: Such services help employers maintain a New Zealand payroll efficiently, along with key employment aspects like contracts, benefits, timesheets, and more. 

Payoneer Workforce Management helps with effective payroll management in New Zealand. The EOR service also assists with employee onboarding and termination, taxation, leave and benefits entitlements, compliance with local laws and regulations, and more. 

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