Employment & HR in New Zealand

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Thinking of starting your own business in New Zealand but unsure how to proceed with it? Whether you are a domestic entrepreneur or an international investor, starting a business venture is a humongous task anywhere. 

New Zealand is a developed economy and has well-defined procedures for working businesses. Some of the essential aspects of commencing a venture in New Zealand include coming up with an idea, going over local and national regulations, registering the company, coming up with an impactful name for the business, hiring employees, and so much more that sometimes setting up your own business in New Zealand can seem like a behemoth of a task. It becomes even more difficult to think about if you are not a local resident country and have to take care of immigration and foreign investment-related tasks. 

However, if you create a well-thought-out plan and proceed in a structured way, the task of starting a business in New Zealand can be made efficient. While setting up a business in New Zealand may be somewhat time-consuming, the results will be truly rewarding if you follow all the protocols. 

Before we get started on how you can set up your business and start gaining the desired success as an entrepreneur, it is important to get an overview of what it is like, to conduct business in New Zealand.

Quick Overview

Before you set up your business in New Zealand, it is important to know that various government regulations must be complied with. Every owner/investor/promoter needs to ensure that all these regulations are satisfied completely. Regulations for every business would be regarding the standards of health and safety, compliance, tax, company registration, type of company, employee hiring procedures, and other regulations which may be specific to a certain type of business. New Zealand authorities offer various resources and guidelines to help entrepreneurs with all essential aspects of starting a business. This is why New Zealand constantly ranks at no. 1 when it comes to Ease of Doing Business Rankings.

Process of Setting up a Business in New Zealand

Setting up a business in every country can be very different, and as such, entrepreneurs need to know all the steps needed for setting up a business in the country of their choice. If we were to breakdown the process of setting up a business in New Zealand, it would contain the following important steps: –

  • Come up with an idea: The primary step in establishing a business anywhere in the world is to develop a marketable idea. It can also be extremely helpful to undertake primary or secondary research. The research must be focused on the region you are planning to establish your business. This will help you understand the demand and existing supply of that product or service.
  • Make a business plan: Vital for any business to function, survive, and thrive; a business plan outlines how you expect to conduct the business and what milestones you hope to achieve promptly. For example, your business plan can include establishment, expansion, and growth plans. It can contain your target or dream client base and how you plan on bagging these goals. 
  • Check for Visa Requirements: If you are a foreign national looking to establish your business in New Zealand, you need to look up the visa requirements. There are ordinarily two types of visas for those looking to establish their business in New Zealand. It is up to you to find out which one is suitable for you. The two kinds of visas include An entrepreneur Visa and Investor Visa. You must meet the minimum threshold criteria to be eligible for either kind of visa.
  • Come up with a company name: Your company’s name is vital as it is how everyone will identify it. It is also important to be decided before you establish your business as it is required for all the legal formalities and procurement of all permits and registrations. Keep in mind that the company’s name should be unique and attractive and must (if possible) reflect what the business is about.
  • Identify your business type: You need to determine what kind of business you want to establish. Whether you want to establish a sole trader business, a partnership, or a company, you must determine this quickly as it would affect the kind of contracts you need to create.
  • Register your company: It is important to register your company as soon as possible. This is to ensure that no one else snags up your idea or cleverly thought company name. No company can start functions without registration, so getting your business registered as soon as possible is necessary. You may also need to be registered to obtain certain permits vital for your business.
  • Complete all regulation work: The next step would be to procure all permits, complete all registration formalities and get your premises up to date with all the regulatory norms. This includes all the legal formalities and ensuring that all measures have been taken to comply with the required regulations. Some common regulatory measures include health and safety measures not just for the employees but also for all other individuals who your business can impact. You must also check your business’s environmental impact and take the necessary measures to prevent avoidable dangers and reduce unavoidable harms.
  • Hire Employees: Interview candidates and hire employees you find best suited for your needs. Keep in mind that you need to budget the employee expenses as well, so only hire as many people as you need at a time. You can always grow your team as your business increases. An important thing to remember is that you must discuss the probationary period, wages, holidays and paid leaves, and working hours with your prospective employees.

    It is vital to create a personalized contract with every employee and ensure that both parties fulfill all their duties and obligations under the contract terms. The contract must mention all employment details, including terms of termination of services, retirement, superannuation, and other important details. This is a cumbersome task that might require expert assistance. This is where having a professional PEO like Zimyo by your side can be a lifesaver.

Hiring Employees in New Zealand

Hiring Employees is one of the most important tasks in setting up a business. As a new venture, you may have lim
ited funds, making hiring the most suitable employees even more important. While you want to ensure that you get the right people, knowing your duties as an employer is equally important. The responsibilities as an employer are significant but can be effectively managed with an experienced PEO like Zimyo.

  • Trial Period/Probation Period: It is advised to enforce a probation period when hiring employees. In New Zealand, the probation or trial period can be extended to 90 days. It is advised for all businesses to enforce this through the hiring contract itself, with the conditions for termination also mentioned in the same. This is done for the benefit of businesses to effectively judge whether a particular employee meets the expectations or not.
  • Leave and Holidays: Leaves and holidays come in various forms in New Zealand, and every employer must ensure that they provide the appropriate number of leaves.
  • Full-time employees are entitled to at least 4 weeks of paid Annual leaves. Contractors are not entitled to any annual leaves
  • 10 days of public holidays are paid, and the annual leaves. 
  • Employees working with a company for less than 6 months are entitled to get 5 paid sick leaves
  • Employees working for over 12 months are entitled to get 10 days of paid sick leaves.
  • Maternity Leave: As per the law in New Zealand, there are 26 weeks of maternity leave. These 26 weeks start from the date of childbirth. However, there are certain exceptions to this, including: –
  • The female employee can start her Maternity leave before her date of childbirth if she has been told to do so by her doctors.
  • If the nature of her work is unsafe for her concerning her condition (this needs to be judged by the employee as well as the employer
  • Her performance at work is being hampered due to her pregnancy. 

In all of these scenarios, the female would be eligible for extra paid parental leave days in addition to the 26 weeks that are granted after the child is born. 

  • If the employee suffers a stillbirth or miscarriage, they are provided 3 days of paid leave (this applies to both parents).
  • The spouse who is not the primary caregiver may get 1 week of unpaid parental leave if he has worked with a company for under 6 months and 2 weeks of unpaid parental leave if associated with a company for over 12 months.
  • Termination of Services: All businesses must mention the terms for the termination of services in New Zealand. This clause is included for the benefit of both the employers and the employees. The employees would know what kind of conduct is unacceptable in a particular workplace and work accordingly. The notice period for termination extends between 2-4 weeks.
  • Superannuation: The standard age for eligibility for retirement and receiving a pension is 65 years. The superannuation is calculated along with the final payment of an employee. There are different types of pension plans in New Zealand, including:
  • Single and living alone: $22,721
  • Single and Sharing: $20,973
  • Civil union in which one partner is eligible, and the other is not included: $17,478
  • Civil union in which both qualify: $34,995
  • Civil union in which one partner is eligible, and the other is included: $33,225
  • Work Hour Norms: The hiring contract, which is a mandatory requirement for all New Zealand businesses, must mention (in writing) the working hours of the employee. While the standard maximum number of working hours is 40 hours, various conditions must be remembered: –
  • Employers need to pay overtime wages if they ask the employees to work beyond their working hours. 
  • The daily working hours of the employees must be mentioned in the contract and must not be over 7.5-8 hours daily. 
  • Employee hiring contracts must strictly mention the type of employment a particular employee is being hired for, whether full-time or contractual. An independent contractor would not have the same benefits as a full-time worker.

How Easy is it to conduct business in New Zealand?

New Zealand has been constantly ranked as one of the best nations regarding ease of doing business. Here are some essential aspects related to the ease of doing business in New Zealand: – 

  • Starting a Business: As per the latest report of the World Bank, New Zealand ranks no. 1 in the Ease of Doing Business Rankings. This report is generated after collecting data from hundreds of countries across 41 different indicators. New Zealand has the least number of formalities needed to start a business. As per this report, it only takes 0.5 days to start a business in New Zealand. To start, businesses must create a RealMe login which is mandatory to register with the government.
  • Managing Permits: Depending upon the kind of business you want to establish, there would be various permits that you would need to obtain from the government. These permits can be related to health and safety measures, environmental impact permits, and food and drug permits. As a standard in New Zealand, employers must figure out who would be affected by their business. They then need to make all the necessary arrangements to avoid any preventable harms and reduce the harmful impacts of those unavoidable dangers.
  • Getting Power: To run any business, electricity is necessary. The owner’s responsibility is to get their company site/building checked by professionals to find out how much electrical load they would need to function smoothly. Getting the appropriate electricity permit and load from the power plant authorities is
  • Getting Credit: Credit is important for almost all businesses. Your business plan must include how and from where you can source funding and credit. You need to approach all these sources like banks and figure out which one suits you the best. Credit can also be procured in the form of raw materials and products. It is thus important to find out suppliers who would provide you with the required products or materials on credit.
  • Managing Payroll:  As you hire employees, you also need to start maintaining records of each one of them. As you grow, it can become very difficult to keep track of all of the employees, their wages, working hours, leave, etc. It is important to install a payroll managing system or department that is equipped to keep track of all such things. With an established PEO like Zimyo, these tasks can be managed efficiently.
  • Paying Taxes: Every business has to pay taxes to the government. These can include sales tax, GST, land tax, and other business-related taxes. It is equally important to learn about deductions to determine which business expenditures can be claimed while filing taxes. It is thus important for all business owners to have some knowledge about it and hire a professional who can effectively file the taxes.
  • Enforcing Contracts: Whatever business relationship your business enters, you must create and enforce contracts. These include employee hiring contracts, partnership contracts, mergers, procurement, and delivery contracts, etc. Various resources can automate the hiring process end-to-end to make the entire procedure easier.
  • Resolving Insolvency: If your business runs into insolvency, you need to resolve it.
  • If your business is a company, a liquidator would be appointed who would sell off all the company’s assets to resolve insolvency. 
  • If the business is a partnership or sole trader, the partners or owners may have to fund unless they are declared bankrupt. 

New Zealand offers excellent infrastructure and resources for business owners and investors to take advantage of. Well-defined procedures and guidelines make the task of opening and operating a business venture in New Zealand a seamless experience for investors from across the world.