Doing business in New Zealand - Grant Thornton

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Labour Summary • New Zealand has traditionally had a workforce skilled in construction and production but there has been a long-standing shift towards employment in the services sector • A state-operated social welfare system provides benefits during sickness, unemployment, disability and retirement and is funded by general taxation • New Zealand enforces minimum wage legislation Wages The average weekly earnings for fulltime salary and wage earners is around NZD$898 (as at June 2011). Minimum wage From 1 April 2012, the adult minimum wage rate (before tax) for employees aged 16 or over is $13.50 per hour ($540 for a 40-hour week). The rate applying to new entrants (employees aged 16 and 17 who are new to the workforce) and employees on the training minimum wage, is $10.80 per hour ($432 for a 40-hour week). By law, employers must pay at least the minimum wage - even if an employee is paid by commission or by piece rate. The minimum wage applies to all workers aged 16 years or older, including home workers, casuals, and temporary and part-time workers. Social welfare costs There are no mandatory contributions made by employers or employees to fund social security. New Zealand’s comprehensive social welfare benefits are funded through general taxation. Pensions There are no compulsory superannuation savings schemes in New Zealand, although the voluntary KiwiSaver superannuation regime requires a compulsory contribution from employers of 2% of the employee’s gross salary or wage where the employee is a registered member of a KiwiSaver scheme. Outside of KiwiSaver, many employers pay pension contributions for their employees. Employer and employee contributions are usually paid into a superannuation or pension fund, the assets of which are kept separate from the assets of the employer. Employer contributions are generally subject to employer superannuation contribution tax (ESCT) at the employee’s marginal tax rate. Fringe benefits Non-cash benefits are subject to fringe benefit tax (FBT), which is borne by the employer and not the employee. Examples of benefits subject to FBT include motor vehicles provided by the employer that are available for private use, the provision of private healthcare, loans at concessional rates of interest, and free, subsidised or discounted goods and services. Holidays and leave Holiday pay Under the Holidays Act 2003, employees are entitled to a minimum of four weeks annual leave after the first year of employment. Payment for annual leave is at the employee’s average weekly earnings over the 12-month period before the leave is taken. Employees can ask (in writing) to cash-up up to one week of their annual holidays each year. There are also 11 statutory public holidays each year – see country profile, p4. Sick leave For most employees, there is a minimum provision of five days paid sick leave after the first six months of continuous employment. An additional five days paid sick leave accrues from that point on, after each subsequent 12-month period. Employment agreements can provide for more generous sick leave provisions. The relevant daily pay must be used to calculate payment for sick leave. It reflects what the employee would have been paid if they had worked on the day in question. Doing business in New Zealand 12
Paid parental leave Paid parental leave funded by the Government was introduced in New Zealand in 2002. This provides payment for up to 14 weeks leave upon the birth of a child or adoption of a child under six. Payment is capped at a maximum of NZD$475.16 a week before tax. The payment can be taken by one parent, or shared between two eligible parents. Under the Parental Leave and Employment Protection Act 1987 provision also exists for unpaid leave. For more information visit: www.dol.govt.nz/er. Accident compensation The Accident Compensation Act 1982 removed the right to sue in the New Zealand Courts for damages for death or injury by accident in New Zealand. In place of such prior rights, the legislation introduced a comprehensive no-fault accident insurance scheme covering all personal injury by way of accident and occupational disease (see workplace accident compensation under other taxes, p27). The compensation scheme is funded by payroll levies imposed on employers and employees. Healthcare Healthcare is provided on a subsidised basis to individuals who are on a low income and have a community services card or to individuals with a medical condition necessitating high use of health services. Entitlement to healthcare does not depend on insurance, although private insurance is available. Employment protection legislation A number of statutes provide protection to employees. The primary statute is the Employment Relations Act 2000. This governs the negotiation, content and enforcement of employment agreements, and contains a number of protections for employees. Objectives of this legislation include: • The promotion of good faith dealings and negotiations between employers, and employees and their unions • The promotion of collective bargaining and protection of individual choice • The promotion of mediation in dispute resolution in preference to judicial intervention • Observance of the principles underlying International Labour Organisation conventions on freedom of association and the right to organise and bargain collectively The Employment Relations Act also allows employers and employees to agree to trial periods of 90 days or less. This is aimed at encouraging employers to take on new staff. Other legislation governing employment includes the: • Holidays Act 2003 • Parental Leave and Employment Protection Act 1987 • Minimum Wage Act 1983 • Wages Protection Act 1983 • Equal Pay Act 1972 • Health and Safety in Employment Act 1992 • Human Rights Act 1993. Doing business in New Zealand 13
Page 1 and 2: Grant Thornton New Zealand 2012 Doi
Page 3 and 4: Foreword If you are planning on doi
Page 5 and 6: • Queen’s Birthday - 1st Monday
Page 7 and 8: • The Credit Contracts and Consum
Page 9 and 10: Imports Import restrictions There a
Page 11: Branch in New Zealand Registration
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Page 19 and 20: Attributed foreign income New Zeala
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Doing business in New Zealand - Grant Thornton

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