New Zealand: Labour and employment

Doing Business in NZ

Haere mai is Māori for welcome and New Zealand is one of the most open economies in the world. But there are rules and regulations that will apply, and we are familiar with them.

This "Doing Business in NZ" publication is designed to provide the prospective investor with an introductory guide to the New Zealand legal framework as it applies to business. The information provided was accurate at the time of publication, and will be updated regularly. But it should not be relied upon as a basis for making business decisions as circumstances, business conditions, government policy and interpretation of the law may change.

We recommend that you seek advice specific to your needs before making any decisions and will be happy to assist.

Employment Relations Act

The Employment Relations Act 2000 is the principal statute governing employment in New Zealand. It aims to promote good faith in the employment relationship and the right of workers to bargain collectively.

Agreements must be in writing, and may be individual (between an individual employee and the employer) or collective (between one or more unions and one or more employer). From 1 July 2011 employers must hold a signed copy of employment agreements.

Union membership is not compulsory but all collective agreements must be negotiated and concluded by a union.

Good faith

The parties to an employment relationship must not do anything, either directly or indirectly, to mislead or deceive each other. They must be "active and constructive," as well as "responsive and communicative" in their dealings.

The Act also requires parties to bargain in good faith. Employers and employees/unions must, at a minimum; come to the bargaining table, listen and respond to what the other party puts forward. Parties bargaining for a collective agreement must conclude the collective contracts unless there are "genuine reasons" not to.

Further, employers proposing to take an action that may have an "adverse effect"on their employees must (subject to genuine although strict confidentiality exceptions) provide information about the decision and consult with their employees in good faith before the decision is made.

Sale of a business/contracting out

When engaging in a sale, merger or contracting out arrangement, as well as complying with the good faith/consultation requirements described above, an employer must negotiate with the proposed purchaser/new employer in relation to the employees. Such negotiations must include discussion about who will be offered employment with the new employer, and on what terms and conditions.

The Act also provides that "vulnerable employees" (primarily cleaning and food catering workers, as well as some other types of vulnerable workers in specified sectors) are entitled to transfer to the new employer as of right and to bargain for redundancy payments with the new employer if their services are not required.

Termination

Most individual employment agreements are indefinite (i.e. they continue until terminated) but the law also recognises casual and fixed term employment arrangements. Fixed term agreements are lawful, but subject to certain restrictions.

The employee can end an indefinite employment arrangement by giving the specified notice period. However, an employer can terminate an employee's employment only after following a prescribed legal process and only for reasons of redundancy, misconduct, poor performance or incapacity. However employers can agree on a written 90 day trial period, during which they can end employment without following the normal process or facing a personal grievance. The courts supervise trial period clauses very strictly (for example agreements with trial clauses must be signed before the employee starts work).

There is no statutory right to redundancy compensation in New Zealand and, other than in very limited circumstances, compensation is only payable if it is provided for in the employment agreement.

Dispute resolution

The Act encourages mediation as the primary means of settling employment disputes. If mediation is unsuccessful, the parties may have their dispute decided by the Employment Relations Authority, an investigative body. If still unsatisfied, parties have a right of appeal to the Employment Court.

Very often employment disputes are solved in mediation and do not proceed to litigation.

Strikes and lockouts

The only lawful strikes or lockouts are those which relate either to bargaining for a collective agreement or to health and safety issues.

When a strike occurs, an employer can only use existing employees to perform the work of the striking employees, and then only if the existing employees agree to perform the work. External workers may only be employed when the work is necessary for public health and safety reasons.

Union access

Union representatives have a right to request access to a work place at reasonable times, in a reasonable manner, for purposes related to union business (which includes recruiting members). Employers cannot unreasonably refuse access.

Working conditions

Workforce

In general, the New Zealand workforce is well-educated and well-trained. There are occasional shortages of senior management and skilled technical employees.

Wages

The minimum wage under the Minimum Wage Act 1983 is reviewed annually. Currently, the minimum wage for employees over the age of 18 is NZ$13 an hour or NZ$104 for an 8 hour day, or NZ$520.00 for a 40 hour week. The average total weekly earnings (full time equivalent) as at March 2011 were NZ$997.40. (Source: Quarterly Employment Survey, Statistics New Zealand).

Holidays and leave

In addition to 11 statutory holidays, employees are entitled under law to at least four weeks' paid annual leave after 12 months of employment.

After six months' continuous employment, employees are entitled to:

  • a minimum of five days' sick leave which they can also draw on when their spouse or someone who depends on them for care is sick or injured. Accumulated sick leave to at least 15 days must be carried over from year to year, and to
  • bereavement leave of three days on the death of an immediate family member and of one day in all other circumstances where the employer accepts that the employee has suffered bereavement.

KiwiSaver

All new employees must be automatically enrolled in the KiwiSaver superannuation scheme. Automatic enrolment does not apply to temporary employees or to most business sale situations. Existing employees can also enrol in KiwiSaver if they wish.

Employees who are automatically enrolled have a six week period in which they can opt out.

Employees who are members of KiwiSaver will have part of their gross earnings (minimum of 2%) deducted and paid by their employer to a superannuation scheme. Required employer contributions are 2%. Total remuneration approaches to KiwiSaver are generally permitted.

Payroll tax

In addition to KiwiSaver contributions and ACC levies (see below), employers in New Zealand are required to deduct "Pay As You Earn" payroll tax (PAYE). Deductions are made on a fortnightly or monthly basis. The Inland Revenue Department may also require other deductions such as payments towards student loans or child support.

Parental leave

The Parental Leave and Employment Protection Act 1987 provides for both parents to take specified periods of parental leave (unpaid) on the birth or adoption of a child.

Government funded paid parental leave

Primary caregivers are entitled to receive up to 14 weeks' paid leave of a maximum of $429.74 (gross) per week, increasing to $458.82 (gross) per week from 1 July 2011, or 100% of the parent's previous weekly earnings, whichever is the lower.

To be eligible, parents must have been in paid employment with a single employer for at least an average of 10 hours per week for at least six months before the birth or adoption of a child

The scheme allows the mother of the child to claim the paid leave or transfer the payment to the child's other parent, whether the father or a same sex partner.

Equal opportunities

Legislation is in place to ensure that employers cannot discriminate on the basis of an employee's (or prospective employee's) sex, marital status, religious beliefs, ethical beliefs, colour, race, ethnic or national origin, disability, age, political opinion, employment status, family status, sexual orientation or union involvement.

Health and safety

Employers and employees in control of workplaces have an obligation under the Health and Safety in Employment Act 1992 to take all practicable steps to prevent harm to employees. The obligations under this legislation are onerous, and fines and reparation awards can be significant.

Accident Compensation

In New Zealand, legal claims relating to personal injury are prohibited under the Accident Compensation Act 2001. Instead, the Act provides a statutory no-fault scheme under which cover is available for those suffering personal injury.

Coverage is broad based and includes most personal physical injuries, regardless of whether they occur in the workplace or elsewhere. Unless a crime is involved, purely mental injury is not covered by the scheme.

Compensation for injuries can take the form of payments for loss of earnings, health care treatment, cost of rehabilitation, independence allowance for disability, funeral expenses and death benefits for dependents. The scheme is funded from a number of sources, including levies on employers (linked to the amount of wages paid, with levy rates being determined on the basis of injury rates in the relevant industry), levies on employees, taxes on vehicle registration and taxes on petrol.

Accident compensation benefits are available to non-residents who are injured while in New Zealand. However, earnings-related compensation is not available to non-residents who derive their income from outside New Zealand.

We make every effort to ensure the accuracy of the information provided but it should not be relied upon as a basis for making business decisions as circumstances, business conditions, government policy and interpretation of the law may change.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.