Setting up a company

Working conditions

Legal weekly duration

40 hours a week. Flexible work arrangements, part-time work, job sharing, home-based work and paid parental leave all help workers in New Zealand to achieve a balance between work and personal lives.

Retirement age

The National Superannuation Scheme entitles all to a pension at the age of 65. Residence requirements vary. There is no set age to retire and it is illegal to force retirement because of an employee’s age.

Working contracts

All employers must offer their workers either an individual or collective Employment Agreement written in plain language. Employment Agreements should include:

• Minimum wages for employees aged 18 or older
• Minimum wages for employees aged 16-17
• The same rate for the same job for male and female employees
• Four weeks’ paid annual leave after 12 months in the job
• 11 public holidays per year, when those fall on days of the week when an employee would otherwise work
• after 12 months’ employment, up to 12 months’ parental leave

Employment agreements may also include conditions relating to duties and responsibilities, the term of the agreement, pay rates, pay day, hours of work, health and safety, company policy, redundancy, restraint of trade, etc.

There is no automatic right to the renewal or extension of an Employment agreement unless this is specifically stated in your agreement. As a general rule, a short-term agreement means just that. So it pays to be cautious about your expectations of continued employment, even though you may feel you have preformed well in a temporary position.

For more information, see here The employment contract act 1991 and the employment relations act 2000.

Cost of labor

Minimum wage

The minimum wage for employees aged 16 years and over rose to $12 an hour before tax on 1 April 2008, except for new entrants (16 and 17 years old) and employees subject to the minimum training wage. That’s $96 for an eight hour day, or $480 for a 40 hour week. The new entrant minimum wage is $9.60 an hour before tax as of 1 April 2008.  That’s $76.80 for an eight hour day, and $384 for a 40 hour week.

Average wage

New Zealand remains a low-wage economy, according to figures produced nationally and internationally: USD 26,960 per year for men and USD 18,379 for women. For more information go to the Department of Labour's website.

Social contributions

Social security contributions paid by employers: Contributions paid by the employer : 9%
Social security contributions paid by employees: Contributions paid by the employee : 11.27%

Social partners

Social dialogue and involvement of social partners

Employees can choose whether they wish to join a union. Jobs cannot be withheld on the basis of membership or non-membership of a trade union. Employees who choose to belong to a union are covered by the union’s collective agreement. Employees who choose not to belong to a trade union must negotiate an individual Employment agreement.

The most dramatic change in the organization of labor in New Zealand is arguably the individualization of the employment relationship, which is more pronounced among younger workers. The public sector is more strongly unionized than the private sector. There is growing evidence of a collapse of collective bargaining in the private sector; it is five times more common in the public sector. Union renewal did not occur when the Employment Relations Act replaced the Employment Contracts Act. Employers’ organizations have widened the range of their services from lobbying nationally and locally on behalf of business and industry to include legal, education and promotional activities. They are specifically addressing regional shortages of skilled labor, through the provision of schemes such as migrant worker placement. There is less need for institutional employer industrial representation, given that less than a quarter of New Zealand workers are covered by a collective agreement.

Unions

The New Zealand Council of Trade Unions

Unionization rate

Trade union membership in New Zealand has substantially declined in the early 1990s, partly as a consequence of labor market de-regulation that saw individual employment contracts promoted and multi-employer contracts decline. In 1985, 43.5 percent of the total employed labor forces were union members. Union membership has recently risen for the fourth year in a row to 21.7 percent of wage and salary earners in 2005-06, only half of what it was in the mid-1990s.

Labor regulation bodies

Department of labor
Business New Zealand
Employment Court of New Zealand