Employment

New Zealand employment law provides for a set of minimum entitlements that must be complied with.

Minimum wage

All adult employees must be paid the minimum wage. From 1 April 2026, the minimum wage in New Zealand is NZ$23.95 per hour, before tax. A lower starting-out wage and training wage may apply in limited circumstances, including for certain younger employees entering the workforce and employees undertaking recognised industry training. From 1 April 2026, these rates are both $19.16 per hour, before tax.

Paid time off

Each year, employees are entitled to 12 public holidays, four weeks of paid annual leave (after 12 months of continuous employment) and paid sick leave (10 days), family violence leave and bereavement leave. The Holidays Act 2003 (Holidays Act) governs these minimum entitlements and is a complex piece of legislation which has given rise to compliance issues for many businesses in recent years.  

Parliament has recently passed the Employment Leave Act 2026, which will replace the Holidays Act with a new framework intended to provide simpler and clearer methods for accruing, calculating and paying employee leave entitlements. The Act received Royal Assent on 6 August 2026 and will generally come into force on 6 August 2028. During the two year transition period, employers must continue to comply with the Holidays Act.

Parental leave

Eligible employees are entitled to up to 52 weeks unpaid parental leave, with up to 26 weeks paid by the Government. Some larger employers also offer parental leave policies that provide more generous entitlements than the statutory minimum, such as employer-funded 'top-ups', additional paid leave, or additional return-to-work support.

The statutory duty of good faith is the equitable cornerstone of employment relations in New Zealand. It requires parties in an employment relationship to be responsive and communicative, and to not mislead or deceive the other. As a general rule, employers must consult with employees before taking any action that might impact the workforce, particularly before making any changes that may affect ongoing employment.

All employees must have written employment agreements containing certain mandatory terms. Employment agreements may take the form of an individual agreement between an employer and employee, or a collective agreement if employees are members of a trade union.  

Most employees in New Zealand work on a permanent basis. A person can also be employed on a fixed-term or casual basis. There are different legal requirements and entitlements for different types of employment relationships.

Employers cannot ‘fire at will’ in New Zealand. Subject to limited exceptions, which we have set out below, termination must meet the statutory test of justification, meaning it must be justified by one of a limited set of reasons (for example, misconduct, performance issues, redundancy or incapacity) and there are procedural requirements that must be followed.

A new employee’s employment may be subject to a trial period of 90 days or less to test their suitability for the role. An employer may dismiss an employee on notice during the trial period, if certain strict processes are followed, in which case the employee is not able to bring an unjustified dismissal claim.

Additionally, a high-income threshold for unjustified dismissal claims is now in place following the passing of the Employment Relations Amendment Act 2026. Employees earning NZ$200,000 or more per year under new employment agreements are generally unable to raise a personal grievance for unjustified dismissal, or for unjustified disadvantage relating to dismissal. For existing employees, a 12-month transition period applies, meaning the threshold will not apply until 21 February 2027. The policy rationale for the change is to give employers greater flexibility and certainty when managing high-income roles that can have a significant impact on organisational performance.

The recent amendments also limit potential remedies for all employees where their conduct has contributed to the circumstances giving rise to a personal grievance. In particular, the Employment Relations Authority or Employment Court must not award any remedy where the employee’s conduct amounts to serious misconduct.

New Zealand employees are not entitled to any statutory compensation or severance payments. However, there may be a right to compensation as agreed in the employment agreement. All employees are entitled to their contractual notice period, as well as any outstanding salary and annual leave entitlements if they are made redundant.

Employees in specific industries (e.g. cleaning services, food catering and aged care), where jobs are particularly vulnerable to restructuring, have additional statutory protections under the ERA.

Currently, all employees who believe they have been treated unfairly have access to New Zealand’s personal grievance regime. A personal grievance is a particular type of complaint which must be made to the employer within 90 days of any alleged instance of discrimination, harassment, bullying, or any disadvantage or dismissal (or, in the case of alleged sexual harassment, within 12 months of the event occurring).

If a dispute cannot be resolved directly between an employee and employer, the Government provides a free mediation service. A dispute that cannot be resolved at mediation may be escalated to the Employment Relations Authority, or on appeal, to the Employment Court. The vast majority of employment relations disputes are resolved by way of a confidential settlement agreement before, or at, the mediation stage.

Employees in New Zealand can choose whether to join a trade union. Employers, unions and employees are encouraged to work together and have a statutory duty to do so in good faith.

As at 1 March 2025, registered union membership in New Zealand was 435,110, representing approximately 18% of employees, or around 15% of the broader employed labour force.² The public and community services industries (such as health care and social assistance, public administration and safety, and education and training) are currently the most unionised sectors.

The Employment Relations Amendment Act 2026 has now removed the previous '30-day rule'. New employees whose work is covered by a collective agreement no longer need to start employment on the terms and conditions of that collective agreement for their first 30 days. Instead, employees may choose to join the applicable collective agreement or agree to an individual employment agreement from the outset. Employers no longer need to provide an 'active choice' form, but must still provide new employees with information to help them make an informed decision about union membership.

Businesses can also engage independent contractors to provide services. Independent contractors are not afforded the same minimum statutory entitlements as employees and are responsible for meeting their own tax obligations. 

Contractors can challenge their status in the courts if they believe they are not genuine contractors, and should be classified as employees (despite any contractual or other documentation to the contrary). If they are successful, this can give rise to liabilities for minimum entitlements under employment legislation and tax issues for the employer.

The Employment Relations Amendment Act 2026 has introduced a new 'gateway test' to provide greater certainty when assessing worker status. If all of the gateway test criteria are met, the worker will be treated as an independent contractor. This marks a shift from the previous approach, which focused on the real nature of the relationship and how it operated in practice, rather than solely on the terms of the written contract. If the gateway test is not met, the existing common law tests will continue to apply. The gateway test came into force on 21 February 2026 and is not retrospective, so businesses should review both their contractor documentation and how their contractor arrangements operate in practice.

The Health and Safety at Work Act 2015 and related regulations set out New Zealand’s workplace safety regime.

Businesses are responsible for the health and safety of their workers (including employees and any independent contractors) and anyone affected by their work, and must provide and maintain a safe working environment, taking into consideration both physical and mental wellbeing. 

In the case of a breach, a business and its officers (including directors) can be prosecuted in the criminal courts by the regulator, WorkSafe New Zealand, and significant penalties can be imposed (including fines and, in the case of officers of offending employers, imprisonment).

The Health and Safety at Work Amendment Act 2026 has been enacted and will come into force on 1 April 2027. The amendments are intended to refocus the health and safety regime on the management of 'critical risks', reduce unnecessary compliance costs and provide businesses with greater certainty about their obligations. Until the amendments come into force, businesses must continue to comply with the existing regime.

Accident Compensation Corporation (ACC) is a form of social insurance which provides personal injury cover for everyone in New Zealand. It is a no-fault system that provides compensation to people who are injured in accidents (including those suffered at work). Legal action for personal injury is generally prohibited in New Zealand.

Employers in New Zealand are not required to offer health insurance to employees, but they must contribute to ACC through regular levies. Employers that do not pay ACC levies can be liable for significant penalties.

KiwiSaver is a voluntary, work-based savings scheme designed to help New Zealanders save for their retirement. While KiwiSaver is not compulsory, employees must 'opt-out', meaning employers must enrol any eligible new hires and provide them with opt-out information. It is possible that there will be changes ahead for KiwiSaver, including the possibility of participation in KiwiSaver becoming mandatory, depending on the outcome of this year’s general election.

Employees that participate in KiwiSaver must contribute a defined percentage of their before-tax earnings (at least 3.5%). These contributions are deducted by their employer each time they are paid. Separately, employers must also make a compulsory contribution of at least 3.5% of each participating employee’s before-tax salary or wages. Private superannuation schemes are fairly uncommon in New Zealand.